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 THE UNIVERSITY 
 
 OF ILLINOIS 
 
 LIBRARY 
 
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 HTSTORICAL SKETCH 
 
 BANK OF ENGLAND: 
 
 EXAMINATION OF THE QUESTION 
 
 AS TO THE PROLONGATION OF 
 
 THE EXCLUSIVE PRIVILEGES 
 
 THAT ESTABLISHMENT. 
 
 1. O X I) O N : 
 
 rniNTKU FOR 
 
 LUXcaiAX. UEES. ORMF-:, HROWX. 6c GHEEN, 
 
 I'ATF.RNOSTP.R ROW.
 
 LONDON: 
 
 PRINTED BY S. MANNING AND CO. 
 
 London-honse-yard, St. PaHl's.
 
 TO 
 
 THE RIGHT HON. 
 
 C. POULETT THOMSON, M.P., 
 
 TREASURER OF THE NAVY, ETC. 
 
 THIS TRACT, 
 
 WRIITEN UPON AN IMPORTANT SUBJECT, 
 
 WITH EVERY PART OF WHICH HE IS THOROUGHLY CONVERSANT, 
 
 IS MOST RESPECTFULLY INSCHMJEl).
 
 CONTENTS. 
 
 Chap. I. — Convektibility or Bank Paper ... 7 
 
 II. — Historical Sketcii of the Bank of England 12 
 III. — Bank of England in its Connexion with 
 
 Government and the Publk; ... ^3 
 
 IV. — Prolongation oi the Bank C'hautek . . 42 
 
 \. — Appendix ....... 60
 
 HISTORICAL SKETCH, &c. 
 
 The object of this Tract is, to lay before the reader a 
 brief view of the History and Transactions of the Bank of 
 England, in so far as they are of a public character, and 
 to inquire into the expediency of prolonging the Bank's 
 exclusive privileges for an additional term of years — But 
 to facilitate these inquiries, we beg to premise one or two 
 remarks of a general nature. 
 
 CHAPTER I. 
 
 Convertibility of Bank Paper. 
 
 It is needless to waste the reader's time, by making- 
 lengthened statements to shew the necessity of subjecting 
 the issuers of notes to the obligation of paying them on 
 demand. Wherever the power of issuing paper without 
 this check, has been conceded to any set of persons, 
 it has been abused, or, which is the same thing, 
 such paper has uniformly been over-issued, or its value 
 depreciated, from excess. Hence it is now admitted on 
 all hands to be indispensable, in order to prevent inju- 
 rious fluctuations in the value of money, that all notes 
 be made payable, at the pleasure of the holder, in an 
 unvarying quantity of gold or silver. This renders it 
 impossible for the issuers of paper to depreciate its value
 
 8 CONVERTIBILITY OF 
 
 below that of the precious metuls. Tliey may, indeed, by 
 over-issuing paper, depress the value of the whole cur- 
 rency, gold as well as paper, in the country in which the 
 over-issue is made ; but the moment that they do this, 
 gold begins to be sent abroad ; and paper being' returned 
 upon the issuers tor payment, they are, in order to prevent 
 the exhaustion of their coffers, compelled to lessen their 
 issues; and thus, by raising the value of the currency, 
 stop the drain for bullion. 
 
 It does, however, appear to us, that it is not only neces- 
 sary, in order to prevent the over-issue of paper, to enact 
 that all notes should be payable on demand ; but that it 
 is farther necessary, in order to ensure compliance with 
 this enactment, to prohibit any one from issuing notes, 
 until he has satisfied the Government of his ability to 
 pay them. The circumstances that excite public con- 
 fidence in the issuers of paper, are often of the most 
 deceitful description; and innumerable instances have 
 occurred, of the population of extensive districts having 
 suffered severely from the insolvency of bankers in whom 
 they placed the utmost confidence. In 1793, in 1814, 
 1815, and 1816, and again in 1825, a very large propor- 
 tion of the country banks were destroyed, and produced 
 by their fall an extent of ruin that has hardly been 
 equalled in any other country. And when such disasters 
 have already happened it is surely the bounden duty of 
 Government to hinder, by every means in its power, their 
 recurrence. It is no exaggeration to affirm, that we 
 have sustained ten times more injury from the circula- 
 tion of worthless paper, or paper issued by persons with- 
 out the means of retiring it, than from the issue of spurious 
 coin. It is said, indeed, by those who are hostile to inter- 
 ference, that coins are legal tenders, whereas notes, being 
 destitute of that privilege, those who suspect them are at
 
 hANK PAPER. 9 
 
 liberty to refuse them ; but, whatever notes tnay be in law, 
 they are, in very many districts, practically , and hi fact, 
 legal tenders ; and could not be rejected without exposing 
 the parties to much inconvenience. It should also be 
 observed, that labourers, women, minors, and every sort 
 of persons, however incapable of judging of the stability 
 of banking establishments, are dealers in money, and 
 are consequently liable to be imposed upon. This, then, 
 is clearly a case in which it is absolutely imperative upon 
 Government to interfere, to protect the interests of those 
 who cannot protect themselves, either by compelling all 
 individuals applying for stamps for notes, to give security 
 for their payment, or, by making sure, in some other way, 
 that they have the means of paying them, and that the 
 circulation of the notes will be a benefit, and not an injury 
 to the public. 
 
 A security of this sort has been exacted in the case of 
 the Bank of England ; and the whole 14,686,000^. lent 
 by the Bank to Government, must be sacrificed before the 
 holders of her notes can sustain the smallest loss. Her 
 stability has, therefore, been truly said, by Dr. Smith, to 
 be equal to that of the British government. The system 
 of taking securities having been found to answer so well 
 in the case of the Bank of England, is a powerful argu- 
 ment in favour of its extension. Were securities taken 
 from the country banks, their ultimate failure, in the 
 capacity of banks of issue, would be rendered impossible ; 
 and a degree of solidity would be given to our money 
 system, which it is idle to expect it can ever attain, so 
 long as it continues on its present footing. 
 
 It is exceedingly difficult to prevent the issue of forged 
 notes. Various schemes have been suggested for this pur- 
 pose ; and though it is hardly possible to suppose that an 
 inimitable note will ever be produced, it is contended, that
 
 10 CONVERTIBILITY OF 
 
 by judiciously combining different sorts of engraving, 
 forgery may be rendered so difficult, as to be but rarely 
 attempted. But however this may be, during the period 
 from 1797 to 1819, when the Bank of England issued one- 
 pound notes, their forgery was carried on to a great extent. 
 And the desire' to check this practice, and to lessen the 
 frequency of capital punishments, appears to have been 
 amongst the most prominent circumstances which led to 
 the return to specie payments in 1821, and the suppression 
 of one pound notes. (Appendix, A). 
 
 According to the existing law, all descriptions of notes 
 are payable at the pleasure of the holder, in coin; but the 
 policy of such a regulation is exceedingly questionable. 
 It may, we think, be easily shewn, that it would be a very 
 great improvement were it enacted, that country bank 
 notes should be payable only in those of the Bank of Eng- 
 land. So long as the latter are convertible at the pleasure 
 of the holder into coin, such an arrangement would, it is 
 obvious, effectually prevent any over-issue of country 
 paper, at the same time, that it would be free from many 
 very serious disadvantages that attach to the present plan. 
 The unjust liabilities imposed upon the Bank of England 
 by the existing system, place her in a situation of great 
 difficulty and hazard. They oblige her to provide a supply 
 of coin and bullion, not for her own exigences only, but 
 for those of all the country banks ; and what is harder 
 still, they expose her, to be deeply injured by any miscon- 
 duct on the part of the latter, as well as by the distress in 
 which they may be accidentally involved. In conse- 
 quence, her free action is at all times in some degree 
 impeded ; and her power to render assistance to the bank- 
 ing and mercantile interests in periods of discredit, is 
 materially diminished. The country banks keep but a 
 small supply of coin in their coffers. They are all, how-
 
 BANK PAPER. U 
 
 ever, holders to a greater or less extent, of government 
 securities ; and whenever any circumstance occurs, to 
 occasion a demand upon them for coin, they immediately 
 sell or pledge the whole or a portion of their stock, carry 
 the notes to the Bank to be exchanged, and then carry the 
 specie to the country. Hence, when any suspicions are 
 entertained of the credit of the country banks, or when a 
 panic originates amongst the holders of their notes, as was 
 the case in 1793 and 1825, the whole of them retreat upon 
 the Bank of England, and 700 or 800 conduits are 
 opened, to draw off the specie of that establishment, 
 which may thus, it is evident, incur the risk of stoppage 
 without having done any thing wrong. It was not the 
 drain for gold from abroad, but the drain for gold from the 
 country, that nearly exhausted the Bank's coffers in 1825, 
 and forced her to issue about a million of one and two 
 pound notes. The currency cannot possibly be in a sound 
 healthy state, while the Bank of England, and, through 
 her, public credit, aie placed in so perilous a situation. 
 And as nothing whatever is gained by the present system, 
 as it is productive of great insecurity and expense to all 
 parties, without having a single countervailing advantage 
 to recommend it, it should certainly be put an end to, by 
 making Bank of England paper legal tender for the paper 
 of the country banks.
 
 12 HISTORICAL SKETCH OF 
 
 CHAP. II. 
 
 Historical Sketch of the Bank of England. 
 
 This great establishment, which has long been the 
 pinicipal bank of deposit and circulation, not in this 
 country only, but in Europe, was founded in 1694. Its 
 principal projector was Mr. William Paterson, an enter- 
 prising and intelligent Scotch gentleman, who was after- 
 wards engaged in the ill-fated colony at Darien. — Govern- 
 ment being at the time much distressed for want of 
 money, partly from the defects and abuses in the system 
 of taxation, and partly from the difficulty of borrowing, 
 because of the supposed instability of the revolutionary 
 establishment, the Bank grew out of a loan of 1,200,000/. 
 for the public service. The subscribers, besides receiving 
 eight per cent, on the sum advanced as interest, and 
 4000/. a year as the expense of management, in all 
 100,000/. a year, were incorporated into a Society deno- 
 minated the Governor and Company of the Bank of 
 England. The charter is dated the 27th of July, 1694. 
 It declares, amongst other things, that they shall " be 
 capable in law, to purchase, enjoy, and retain to them 
 and their successors, any manors, lands, rents, tenements, 
 and possessions whatsoever ; and to purchase and acquire 
 all sorts of goods and chattels whatsoever, wherein they 
 are not restrained by Act of Parliament; and, also, to 
 grant, demise, and dispose of the same. 
 
 " That the management and government of the Corpo- 
 ration be committed to the Governor, Deputy Governor, 
 and twenty-four Directors, who shall be elected between 
 the 25th day of March and 25th day of April, each year, 
 from among the members of the Company duly qualified.
 
 THE BANK OF ENGLAND. 13 
 
 *' That no dividend shall at any time be made by the 
 said Governor and Company, save only out of the interest, 
 profit, or produce arising by or out of the said capital 
 stock, or fund, or by such dealing as is allowed by Act of 
 Parliament. 
 
 " They must be natural born subjects of England, or 
 naturalized subjects ; they shall have in their own name 
 and for their own use, severally, viz. — the Governor, at 
 least 4000Z., the Deputy Governor 3000/., and each 
 Director 2000/. of the capital stock of the said Corpo- 
 ration. 
 
 " That thirteen or more of the said Governors and 
 Directors (of which the Governor or Deputy Governor 
 must be always one) shall constitute a Court of Directors, 
 for the management of the affairs of the Company, and 
 for the appointment of all agents and servants which may 
 be necessary, paying them such salaries as they may con- 
 sider reasonable. 
 
 " Every Elector must have, in his own name and for 
 his own use, 500/. or more, capital stock, and can only 
 give one vote. He must, if required by any member 
 present, take the oath of stock, or the declaration of 
 stock, in case he be one of the people called Quakers. 
 
 *' Four General Courts to be held in every year: in the 
 months of September, December, April, and July. A 
 General Court may be summoned at any time, upon the 
 requisition of nine Proprietors, duly qualified as Electors. 
 
 " The majority of Electors in General Courts have the 
 power to make and constitute bye-laws and ordinances for 
 the government of the Cor|)oration, provided that such 
 bye-laws and ordinances be not repugnant to the laws of 
 the kingdom, and be confirmed and approved, according 
 to the statutes in such case made and provided." 
 
 The Corporation is prohibited from engaging in any
 
 14 HISTORICAL SKETCH OF 
 
 sort of commercial undertaking other than dealing in bills 
 of exchange, and in gold and silver. It is authorized to 
 advance money upon the security of goods or merchan- 
 dize pledged to it j and to sell, by public auction, such 
 goods as are not redeemed within a specified time. 
 
 It was also enacted, in the same year in which the 
 Bank was established, by statute 6th William and Mary, 
 cap. 20, that the Bank " shall not deal in any goods, 
 wares, or merchandize (except bullion), or purchase any 
 lands or revenues belonging to the Crown, or advance or 
 lend to their Majesties, their heirs or successors, any sum 
 or sums of money by way of loan or anticipation, or any 
 part or parts, branch or branches, fund or funds of the 
 revenue, now granted or belonging, or hereafter to be 
 granted to their Majesties, their heirs and successors, 
 other than such fund or funds, part or parts, branch or 
 branches of the said revenue only, on which a credit of 
 loan is, or shall be, granted by Parliament." And in 
 1697 it was enacted, that the "common capital and 
 principal stock, and also the real fund of the Gover- 
 nor and Company, or any profit or produce to be made 
 thereof, or arising thereby, shall be exempted from any 
 rates, taxes, assessments, or impositions whatsoever, 
 during the continuance of the Bank ; and that all the 
 profit, benefit, and advantage from time to time, arising 
 out of the management of the said Corporation, shall be 
 applied to the uses of all the members of the said Cor- 
 poration of the Governor and Company of the Bank of 
 England, rateably and in proportion to each member's 
 part, share, and interest in the common capital and prin- 
 cipal stock of the said Governor and Company hereby 
 established." 
 
 It was further enacted, in 1697, that the forgery of the 
 Company's seal, or of any sealed bill or bank note, should
 
 THE BANK OF ENGLAND. 15 
 
 be felony without benefit of clergy, and that tiie making 
 of any alteration or erasure in any bill or note, should also 
 be felony. 
 
 In 1696, during the great recoinage, the Bank was 
 involved in considerable difficulties, and was even com- 
 pelled to suspend payment of her notes, which were at a 
 heavy discount. Owing, however, to the judicious con- 
 duct of the Directors, and the assistance of Government, 
 the Bank got over the crisis. But it was at the same 
 time judged expedient, in order to place her in a situ- 
 ation the better to withstand any adverse circumstances 
 that might afterwards occur, to increase her capital from 
 1,200,000/. to 2,201,171/. In 1708, the Directors under- 
 took to pay off and cancel one million and a half of Ex- 
 chequer bills they had circulated two years before, at 4f 
 per cent., with the interest on them, amounting in all to 
 1,775,028/. ; which increased the permanent debt due by 
 the public to the Bank, including 400,000/. then advanced 
 in consideration of the renewal of the charter, to 3,375,028/. 
 for which they were allowed 6 per cent. The Bank capital 
 was then also doubled, or increased to 4,402,343/. But 
 the year 1708 is chiefly memorable, in the history of the 
 Bank, for the Act that was then passed, which declared, 
 that during the continuance of the corporation of the Bank 
 of England, " it should not be lawful for any body politic, 
 erected or to be erected, other than the said Governor and 
 Company of the Bank of England, or, for other persons 
 whatsoever, united or to be united in covenants or partner- 
 ship, exceeding the number of six persons, in that part of 
 Great Britain called England, to borrow, owe, or take up 
 any sum or sums of money on their bills or notes payable 
 on demand, or in any less time than six months from the 
 borrowing thereof."— This proviso, which has had so 
 powerful an operation on banking in England, is said to
 
 16 HISTORICAL SKETCH OF 
 
 have been elicited by the Mine-adventure-Company hav- 
 ing commenced banking business, and begun to issue 
 notes. 
 
 The Charter of the Bank of England, when first granted, 
 was to continue for eleven years certain, or till a year's 
 notice after the 1st of August, 1705. The Charter was 
 further prolonged in 1697. In 1708, the Bank having 
 advanced 400,000/. for the public service, without interest, 
 the exclusive privileges of the Corporation were prolonged 
 till 1733. And in consequence of various advances made 
 at different times, the exclusive privileges of the Bank 
 have been continued by successive renewals, to a year's 
 notice, after the 1st of August, 1833. The last renewal 
 was made in 1800, by the act 40th Geo. III., cap. 28, in 
 consideration of an advance by the Bank to the public of 
 three millions for six years without interest. The follow- 
 ing is an account of the various permanent advances made 
 by the Bank to Government, of the occasions on which 
 they were made, and of the increase in the capital of the 
 Bank.
 
 THE BANK OF ENGLAND. 
 
 17 
 
 General Statement of the Affairs of the Bank of England, from 
 its Establishment in 1694, to the present time. 
 
 Amount of original subscription lent 
 
 to the Government at 8 
 
 1694. 5&6 per cent, interest, and 
 
 W. & M. c. 4,000/. for management. 
 
 20. Charter to continue to 1st 
 
 August, 1705 . . . 
 
 Exchequer tallies and orders for pay- 
 ment, having in 1696 
 1697. 8 &9 been at a discount of 40, 
 W.3, c.20. 50, and 60 per cent, and 
 Bank notes at a discount 
 of 20 per cent., the Bank was empow- 
 ered to receive subscriptions for the en- 
 largement of their stock, \ in tallies 
 and orders, and the remaining | in 
 Bank notes. The increase of stock 
 was, in consequence .... 
 
 •,it* Interest at the rate of 8 per 
 cent, was received on amount of tallies 
 and orders, brought in from 24th June, 
 1697. Charter extended to 1st Aug. 
 1710. 
 
 Advanced, by the Bank, part of the 
 
 grants for this year with- 
 
 1708. out interest, after the 1st 
 
 7Anne,c.7. August, 1711,; thus re 
 
 ducing the interest on 
 
 the whole sum lent to Government, to 
 
 6 per cent 
 
 *,* Charter extended to 1st August, 
 1732. 
 
 The Bank had, by 5th Anne, cap. 
 13, undertaken to circulate Exchequer 
 bills for 1,500,000/.; and they now 
 agreed to cancel the same, making, with 
 interest due upon them .... 
 
 *,* They received 6 per cent, inte- 
 rest on this, from Michaelmas 1710. 
 
 By authority conveyed to them by 
 the same Act, they took in subscrip- 
 tions for doubling their capital . 
 
 1709. Feb. 
 
 1710. Dec. 
 
 A call of 15 per cent, 
 made stock . . . 
 
 A call of 10 per cent 
 made stock . . . 
 
 Advancpd to the 
 Public. 
 
 £. S. d. 
 
 1,200,000 
 
 400,000 
 
 1,600,000 
 
 1,775,027 17 10.1 
 
 BankCapital on which 
 ihcStockholdcrsdividc 
 
 £. J. d. 
 
 1,200,000 
 
 1,001,171 10 
 
 2,201,171 10 
 
 3,375,027 17 10' 
 
 2,201,171 10 
 
 
 
 4,402,343 
 656,204 1 
 
 
 9 
 
 5,058,547 1 
 501,448 12 
 
 9 
 11 
 
 5,559,995 14 8
 
 18 
 
 HISTORICAL SKETCH OF 
 
 Bro 
 
 *^* Had 
 
 1713. 12 
 Anne, c. 11. 
 
 1717. 
 * * Redu 
 
 light forward 
 charter renewed to Isl 
 August, 1742, then, as 
 before, having 12months 
 notice, and re-payment 
 of sums lent. 
 
 Cancelled Exchequer 
 bills, and received inte- 
 rest at 5 per cent, on the 
 amount 
 
 ced interest on 1,775,027/. 
 
 om 6 to 5 per cent., after 
 
 1718. 
 
 Purchased of South 
 Sea Company of theii 
 
 stock 
 
 st on this till Midsummer, 
 cent. ; after that, 4 pei 
 
 Increased their capi- 
 tal to enable them to 
 make said purchase • 
 
 Had repaid to tliem 
 out of the sinking fund, 
 part of the 1,775,027/. 
 
 17s. 10i(i 
 
 ced the interest on the 
 rom 5 to 4 per cent. 
 
 Advanced on duties 
 on coal and culm, at 4 
 per cent, in pursuance of 
 above Act .... 
 
 Received remainder of 
 above sum of 1,775,027/. 
 17s. 10|d. from sinking 
 fund 
 
 nut of the sinking fund 
 000,000/. lent to Govern- 
 on lottery, at 4 per cent. 
 Midsummer, 1729, per 
 
 Advanced to t 
 Public. 
 
 £. s. 
 
 3,375,027 17 
 
 2,000,000 
 
 d. 
 
 
 
 BaiikCapital on w 
 thcStocklioldersd 
 
 £. s. 
 
 5,559,995 14 
 
 3,400,000 
 
 hicli 
 vide 
 
 d. 
 
 8 
 
 17s. lOirf. fr 
 Midsummer, 
 
 1722. 
 8G.l,c.21. 
 
 *^* Intere 
 1727, 5 per 
 cent. 
 
 June 24. 
 
 5,375,027 
 4,000,000 
 
 17 
 
 
 
 
 
 
 9,375,027 
 
 17 
 
 101 
 
 
 
 1797 
 
 1,000,000 
 
 
 
 
 
 
 lGec.2,c.8. 
 * * Redn 
 
 8,959,995 
 
 14 
 
 8 
 
 2,000,000/. f 
 
 1728. 
 Midsummer. 
 
 8,375,027 
 1,750,000 
 
 17 
 
 
 10| 
 
 
 
 2Geo.2,c.2. 
 
 10,125,027 
 775,027 
 
 17 
 17 
 
 101 
 101 
 
 
 Received 
 part of the 2, 
 ment in 1717 
 
 9,350,000 
 500,000 
 
 
 
 
 
 
 
 
 Advanced 
 interest, from 
 same Act . 
 
 8,850,000 
 1,250,000 
 
 
 
 
 
 
 
 
 
 Received out of the 
 sinking fund, a farther 
 part of the 2,000,000/. 
 
 
 1738. 
 llG.2,c.27. 
 
 10,100,000 
 1,000,000 
 
 
 
 
 
 
 
 
 
 9,100,000 
 
 
 
 
 
 8,959,995 
 
 14 
 
 8
 
 THE BANK OF ENGLAND. 
 
 19 
 
 Brought forward 
 
 Advanced whliout far- 
 
 1742. tlier interest, thus making 
 
 15G.2,c.l3. the interest which was 
 
 before 6 per cent, on 
 
 1,600,000^, 3 per cent, on 3,200,000/!. 
 
 *,* Charter lenewed to 1st August, 
 
 1764. 
 
 In consequence of above advance, 
 they increased their capital stock by 
 
 subscriptions 
 
 Agreed to cancel Ex- 
 1746. chequer bills issued on 
 
 19 G. 2, c. 6. licenses for retailing spi- 
 rituous liquors, on being 
 allowed 4 per cent, interest . . . 
 A call of 10 per cent, made stock 
 
 Agreed to a propo- 
 1749. sition made by Parlia- 
 
 23G.2,c.6. ment, to receive 4 per 
 cent, on 8,486,800/. to 
 Christmas, 1750, then 3i per cent, to 
 Christmas, 1757, and after that 3 per 
 cent, on the whole. 
 
 •^* Charter renewed to 1st August, 
 
 1 -^< 1786, for which they ad 
 
 4G 3 c 25 ^=i°<^ed 1,000,000/. on 
 
 ■ ' ■ * Exchequer bills, till 
 
 1766, and paid into the Exchequer 
 
 110,000/. 
 
 AilvRiiced to the 
 Public. 
 
 £. s. d. 
 
 9,100,000 
 
 1,600,000 
 
 BankCa.pital on wliicli 
 theStockhoIdcrsdivirte 
 
 £. s. d. 
 
 8,959,995 14 8 
 
 10,700,000 
 
 986,800 
 
 11.686.800 
 
 1781. 
 21G.3,c.60. 
 
 Added to capital stock 
 8 per cent. , . . , 
 
 *,* Charter renewed to 1st August, 
 1812, for which they advanced 
 2,000,000/. for 3 years, at 3 per cent. 
 
 1800. Charter renewed to 
 
 40G.3,c.28. 1st August, 1833, for 
 which they advanced 
 3,000,000/. without interest for 6 years, 
 which was continued, pursuant to the 
 recommendation of the Committee of 
 1807, till 6 months after a definitive 
 treaty of peace. 
 
 1816. Advanced to Govern- 
 
 56G.3,c.96. ment, at 3 per cent. . 
 
 Were allowed to add 25 per cent, 
 from their accumulated profits, to their 
 capital stock 
 
 3,000,000 
 
 14,686.800 14,563.000 
 IJ 2 
 
 840,004 5 4 
 
 9,800,000 
 
 980,000 6 
 
 10,780.000 G 
 
 862,400 
 
 11,642,400 t) 
 
 2,910,600
 
 20 HISTORirAL SKETCH OF 
 
 The Bank of England has been frequently affected by 
 panics amongst the holders of its notes. In 1745 the 
 alarm occasioned by the advance of the Highlanders under 
 the Pretender as far as Derby, led to a run upon the 
 Bank : and in order to gain time to concert measures for 
 averting the run, the Directors adopted the device of paying 
 in shillings and sixpences ! But they derived a more 
 effectual relief from the retreat of the Highlanders ; and 
 from a Resolution agreed to at a meeting of the principal 
 merchants and traders of the city, and very numerously 
 signed, declaring the willingness of the subscribers to re- 
 ceive Bank notes in payment of any sum that might be 
 due to them, and pledging themselves to use their utmost 
 endeavours to make all th^ir payments in the same 
 medium. 
 
 During the tremendous riots in June, 1780, the Bank 
 incurred considerable danger. Had the mob attacked the 
 establishment at the commencement of the riots, the con- 
 sequences might have proved fatal. Luckily, however, 
 they delayed their attack till time had been afforded for 
 providing a force sufficient to ensure its safety. Since 
 that period a considerable military force is nightly placed 
 in the interior of the Bank, as a protection in any emer- 
 gency that may occur. 
 
 In the latter part of 1792 and beginning of 1793, there 
 was, in consequence of a previous over-issue on their part, 
 a general run on most of the private banks ; and about 
 one-third of these establishments were forced to stop pay- 
 ment. This led to a considerable demand for coin from 
 the Bank. 
 
 The year 1797 is, however, the most important epoch in 
 the recent history of the Bank. Owing partly to events 
 connected with the war in which we were then engaged — 
 to loans to the Emperor of Germany — to bills drawn on
 
 THE BANK OF ENGLAND. 21 
 
 the Treasury at home by the British agents abroad — and 
 partly, and chiefly, perhaps, to the advances most unwil- 
 lingly made by the Bank to Government, which prevented 
 the Directors from having a sufficient control over their 
 issues, the exchanges became unfavourable in 1795, and 
 in that and the following year large sums in specie were 
 drawn from the Bank.* In the latter end of 1796 and 
 the beginning of 1797, considerable apprehensions were 
 entertained of invasion, and rumours were propagated of 
 descents having been actually made on the coast. In 
 consequence of the fears that were thus excited, runs 
 were made on the provincial banks in different parts of 
 the country ; and some of them having failed,, the pa^nic 
 
 • So early as December, 1794, the Court of Directors represented to Govern- 
 ment their uneasiness on account of the magnitude of the debt due by the 
 Government to the Bank, and anxiously requested a re-payment of at least a 
 considerable part of what had been advanced. In January 1795, they resolved 
 to limit their advances upon Treasury bills to 500,000i. ; and at the same lime 
 they informed Mr. Pitt that it was their wish that he would adjust his measures 
 for the year in such a manner as not to depend on any further assistance from 
 them. On the lltii of February, 1796, they resolved, "That it is the opinion 
 of this Court, founded upon the experience of the late Imperial loan, that if any 
 further loan or advance of money to the Emperor, or to any of the Foreign 
 Stales, should in the present state of affairs take place, it will, in all probability, 
 prove fatal to the Bank of England. The Court of Directors do, therefore, most 
 earnestly deprecate the adoption of any such measure, and they solemnly protest 
 against any responsibility for the calamitous consequences that may follow there- 
 upon." But notwithstanding these, and many other similar remonstrances, 
 fresh advances of money were made to our foreign allies, and fresh demands 
 upon the Bank ; ti»e Directors reluctantly abandoning their own better judg- 
 ment to what they truly termed the " jyressing solicitatiotis" of the Chancellor of 
 the Exchequer, and their desire to avert " the probable distress which a refusal 
 (on their part) miglit occasion, in the then alarming situation of public affairs." 
 But notwithstanding the difficulties of the Bank were greatly aggravated by that 
 conduct on the part of Government against which the Directors had so strongly 
 protested, she could hardly, in any state of her affairs, have got safely over the 
 crisis of 1797. The run upon the Bank that then took place, was occasioned by 
 alarms of invasion ; and it is clear, as remarked in the text, that while tiiey 
 continued, no paper immediately couvcrtiblc into gold could rcraaiu in circu- 
 lation.
 
 22 HISTORICAL SKETCH OF 
 
 became general, and extended itself to London. Demands 
 for cash poured in upon the Bank from all quarters ; 
 and on Saturday the 25th February, 1797, she had only 
 1,272,000/. of cash and bullion in her coffers, with every 
 prospect of a violent run taking place on the following 
 Monday. In this emergency an Order in Council was 
 issued on Sunday the 26th, prohibiting the Directors from 
 paying their notes in cash until the sense of Parliament 
 had been taken on the subject. And after Parliament 
 met, and the measure had been much discussed, it was 
 agreed to continue the restriction till six months after 
 the signature of a definitive treaty of peace. 
 
 As soon as the Order in Council prohibiting payments 
 in cash appeared, a meeting of the principal bankers, mer- 
 chants, traders, &.C. of the metropolis, was held at the 
 Mansion-house, when a Resolution was agreed to, and 
 very numerously signed, pledging, as had been done in 
 1745, those present to accept, and to use every means in 
 their power to cause Bank notes to be accepted as cash in 
 all transactions. This resolution tended to allay the appre- 
 hensions that the restriction had excited. 
 
 Parliament being sitting at the time, a Committee was 
 immediately appointed to examine the affairs of the Bank; 
 and their Report put to rest whatever doubts might have 
 been entertained with respect to the solvency of the estab- 
 lishment, by shewing that at the moment when the Order 
 in Council appeared, the Bank was possessed of property 
 to the amount of 15,513,690/., after all claims upon it 
 had been deducted. 
 
 Much difference of opinion has existed with respect to 
 the policy of the restriction in 1797; but considering the 
 peculiar circumstances under which it took place, its ex- 
 pediency seems abundantly obvious. The run did not 
 originate in any over-issue of Bank paper; but grew
 
 THE BANK OF ENGLAND. 23 
 
 entirely out of political causes. So long as the alarms of 
 invasion continued, it was clear that no Bank paper imme- 
 diately convertible into gold would remain in circulation. 
 And as the Bank, though possessed of ample funds, was 
 without the means of instantly retiring her notes, she 
 might, but for the interference of Government, have been 
 obliged to stop payments ; an event which, had it occurred, 
 must have produced consequences in the last degree fatal 
 to the public interests. 
 
 It had been generally supposed, previously to the pass- 
 ing of the Restriction Act, that Bank notes would not cir- 
 culate unless they were immediately convertible into cash. 
 But the event shewed, conformably to principles that 
 have since been fully explained, that this was not really 
 the case. Though the notes of the Bank of England were 
 not, at the passing of the Restriction Act, publicly declared 
 to be legal tender, they were rendered so in practice ; 
 being received as cash in all transactions on account of 
 Government, and of the vast majority of individuals. For 
 the first three years of the restriction, their issues were so 
 moderate, that they not only kept on a par with gold, but 
 actually bore a small premium. In the latter part of 1800, 
 however, their quantity was so much increased that they 
 fell to a discount of about 8 per cent., as compared with 
 gold, but they soon after rose nearly to par ; and it 
 was not until 1808 that the decline of their value 
 excited any considerable attention. Early in 1810, they 
 were at a discount of about 13^ per cent., and this extraor- 
 dinary fall having attracted the attention of the Legisla- 
 ture, the House of Commons appointed a Committee to 
 inquire into the circumstances by which it had been occa- 
 sioned. The Committee examined several witnesses; and in 
 their Report, which was drawn up with considerable ability, 
 they justly ascribed the fall to the over-issue of Bank
 
 24 HISTORICAL SKETCH OF 
 
 paper ; and recommended that the Bank should be obliged 
 to resume cash payments within two years. This recom- 
 mendation was not, however, acted upon. And the 
 value of Bank paper continued to decline, as compared 
 with gold, till 1814. 
 
 At the period when the restriction on cash payments 
 took place in 1797, it is supposed that there were about 
 280 country banks in existence. But so rapidly were 
 these establishments multiplied, that they amounted 
 to above 700 in 1813. The price of corn, influenced 
 partly by the depreciation of the currency, and the facility 
 with which discounts were obtained, but far more by defi- 
 cient harvests, and the unprecedented difficulties which the 
 war threw in the way of importation, had risen to an 
 extraordinary height during the five years ending with 
 
 1813. But the harvest of that year being unusually pro- 
 ductive, and the intercourse with the Continent being then 
 also renewed, prices, influenced by both circumstances^ 
 sustained a very heavy fall in the latter part of 1813, and 
 the beginning of 1814. And this fall having proved 
 ruinous to a considerable number of farmers, and produced 
 a general want of confidence, such a destruction of pro- 
 vincial paper took place as has rarely been paralleled. In 
 
 1814, 15, and 16, no fewer than 240 country banks stopped 
 payment, and ninety-two commissions of bankruptcy were 
 issued against these establishments, being at the rate of 
 one commission against every seven and a half of the total 
 number of banks existing in 1813. 
 
 The great reduction that had been thus suddenly and 
 violently brought about in the quantity of country bank 
 paper, had the effect, by extending the field for the 
 circulation of Bank of England paper, to raise its value in 
 1817, nearly to a par with gold. The return to cash pay- 
 ments being thus facilitated, it was fixed, in 1819, by the
 
 THE BANK OF ENGLAND. 25 
 
 act 59 Geo. III., cap. 78, commonly called Mr. Peel's Act, 
 that they should take place in 1823. But to prevent 
 any future over-issue, and at the same time to render 
 the measure as little burdensome as possible, it was 
 enacted, in pursuance of a plan suggested by the late 
 Mr. Ricardo, that the Bank should be obliged, during the 
 interval from the passing of the Act till the return to specie 
 payments, to pay her notes, if required, in bars of standard 
 bullion of not less than sixty ounces weight. This plan 
 was not, however, acted upon during the period allowed 
 by law; for, a large amount of gold having been accumu- 
 lated at the Bank, the Directors preferred recommencing 
 specie payments on the 1st of May, 1821. (See Appen- 
 dix B for an account of the price of bullion, the deprecia- 
 tion of paper, &c., from 1800 to 1821). 
 
 A great diversity of opinion has been entertained with 
 respect to the policy of the return to the old standard, 
 in 1819. By one party it has been represented as a wise 
 and politic measure; they contend that Mr. Peel's Act 
 not only put an end to those fluctuations in the value of 
 money, which had previously been productive of great 
 mischief, and gave effect to the solemn engagements into 
 which the public had entered with the national creditor, 
 but that it did this without adding anything material to 
 the national burdens. But another, and, perhaps, a 
 more numerous party, take a totally different view of this 
 measure ; they contend that the public was not really 
 bound to return to cash payments at the old standard at 
 the termination of the war ; that the return has very 
 greatly enhanced the value of the currency ; and that this 
 enhancement, by adding proportionally to the fixed bur- 
 dens laid on the industrious classes, has been most in- 
 jurious to their interests. It will, however, be found in 
 this, as in most cases of the sort, that the statements of
 
 26 HISTORICAL SKETCH OF 
 
 both parties are exaggerated ; and that if, on the one hand, 
 the measure has not been so advantageous as its apologists 
 represent, neither, on the other, has it been nearly so inju- 
 rious as its enemies would have us to believe. 
 
 In discussing this question it is material to observe, that 
 the value of paper, which had been in 1815 and 1816 
 about 16f per cent, below that of gold, rose in 1817 and 
 1818, from the causes already mentioned, without any 
 interference whatever on the part of Government, to within 
 little more than 2^ per cent, of the value of gold ; and that 
 in 1819 the depreciation only amounted to 4^ per cent. 
 (See Appendix, B). It is, therefore, quite ludicrous to 
 ascribe to the Act of 1819, as is often done, the whole rise 
 that has taken place in the value of the currency since the 
 peace, seeing that the currency had been for three years 
 previously to its enactment from 12^ to 14^ per cent, above 
 its value in 1815, and from 21 to 23 per cent, above its 
 value in 1814 ! The main object which the promoters of 
 the Act of 1819 had in view, was to sustain the value of 
 the currency at the point to which it had recovered itself 
 without legislative interference. This, however, could not 
 be done without recurring to specie payments ; and the 
 difference of 4^ per cent, that obtained in 1819 between the 
 value of gold and paper, was not deemed sufficiently con- 
 siderable to warrant a departure from the old standard, 
 and from the Acts engaging to restore it. 
 
 But it is alleged, that those who suppose that the Act 
 of 1819 added only A\ per cent, to the value of the currency, 
 mistake altogether the effect of the measure. It is ad- 
 mitted, indeed, that paper was then only 4^ per cent, less 
 valuable than gold ; but by reverting to specie payments, 
 we made an unexpected purchase of thirty millions of 
 gold; and it is affirmed, that this novel and large demand, 
 concurring simultaneously with the contraction of paper
 
 THE BANK OF ENGLAND. 27 
 
 in several of the Continental States, and with a falling off 
 in the supply of bullion from the mines, had the effect of 
 adding very greatly to the value of gold itself, and conse- 
 quently to that of the currency. It is very difficult, or 
 rather, perhaps, impossible to determine the precise degree 
 of credit that ought to be attached to this statement ; but 
 while we incline to think that it is well-founded to a cer- 
 tain extent, we see no grounds for believing that it is so 
 to anything like the extent that has been stated. The 
 gold imported into Great Britain, to enable the Bank to 
 resume specie payments, was not taken from any particular 
 country or district, but was drawn from the market of the 
 world; and considering the vast extent of the supply 
 whence it was derived, it is against all reason to suppose 
 that its value could be materially influenced by our pur- 
 chases. We doubt, too, whether the contraction of the 
 paper currency of some of the Continental States, and the 
 substitution of specie in its stead, was not more than 
 balanced by the cessation of the demand for specie for the 
 military chests of the different armies, by the stoppage 
 of the practice of hoarding, and the greater security 
 consequent to the return of peace. And with respect 
 to the falling off" in the supplies from the mines, it is not 
 a circumstance, supposing it to have had a considerable 
 influence, that parliament could take into account. It 
 could neither determine the extent to which bullion had 
 been raised, nor at what point the rise would stop, nor 
 how soon it might again begin to decline. The diminution 
 in the supply of bullion had then continued for too short a 
 period, and its influence on the value of gold was much 
 too uncertain, to make it a ground for interfering in any 
 degree with the standard. 
 
 The decline in the price of most articles that has taken 
 place since the peace, has been often referred to, as a 
 conclusive proof of the great enhancement in the value
 
 28 HISTORICAL SKETCH OF 
 
 of bullion. But the inference is by no means so certain 
 as has been represented. The prices of commodities are 
 as much affected by changes in the cost of their pro- 
 duction, as by changes in the quantity of money afloat. 
 Now there is hardly one of the great articles of commerce, 
 the cost of which has not been considerably reduced, or 
 which has not been supplied from new sources, within the 
 last few years. The growth of corn, for example, has 
 been vastly extended in France, Prussia, and generally 
 throughout the Continent, by the splitting of large estates, 
 and the complete subversion of the feudal system ; and 
 the reduction of its price in this country, is, at least, as 
 much owing to the extraordinary increase of imports from 
 Ireland, as to any other cause. The fall in the price of 
 wool is most satisfactorily accounted for by the introduc- 
 tion and rapid multiplication of Merino sheep in Germany, 
 where they seem to succeed even better than in Spain, 
 and by the growing imports from New Holland and 
 elsewhere. And a very large portion, if not the whole, 
 of the fall in the price of Colonial products, is admitted, 
 on all hands, to be owing to the destruction of the 
 monopoly system, and the vast extension of cultivation 
 in Cuba, Brazil, Louisiana, Demerara, &c. Although, 
 therefore, we do not deny that the falling off in the su})ply 
 of bullion from the mines must have had some influence on 
 prices, we hold it to be the greatest imaginable error to 
 ascribe to it the entire fall that has taken place since the 
 peace. Were its effect rated at 10 per cent, we believe it 
 would be considerably overstated. 
 
 On the whole, therefore, we are disposed to approve of 
 the conduct of those who framed the Act of 1819. That it 
 added to the burdens of the industrious classes, and has 
 been in so far hostile to the public interests, it seems 
 impossible to doubt ; but it has not done this in any thing 
 like the degree which its enemies represent. The period.
 
 THE BANK OF ENGLAND. 29 
 
 too, when it was passed, is now so distant, that the existing 
 ensafrements araonsst individuals have almost all been 
 formed with reference to the altered value of the currency; 
 so that whatever injury it may have occasioned in the first 
 instance, must be nearly gone by. To modify or change 
 the standard at this late period, would not be to repair 
 injustice, but to commit it afresh. At the end of the war, 
 the circumstances were considerably different. The stan- 
 dard had been really abandoned for the previous eighteen 
 years ; and, perhaps, we may now say, that it would have 
 been better, all things considered, had the mint price of 
 bullion been raised, in 1815, to the market price. But hav- 
 ing surmounted all the difficulties attendant upon the 
 restoration of the old standard, and maintained it for a 
 dozen years, it would be in the last degree impolitic to 
 subject it to new alterations. Should the country become, 
 at any future period, unable to make good its engagements, 
 it will better consult its honour and its interest, by fairly 
 compounding with its creditors, than by endeavouring to 
 slip from its engagements by resorting to the dishonest 
 expedient of enfeebling the standard. 
 
 The price of corn, which had been very much depressed 
 in 1821 and 1822, rallied in 1823; and this circumstance 
 contributed, along with others peculiar to that period, to 
 promote an extraordinary rage for speculation. The 
 issues of the country banks being in consequence far too 
 much extended, the currency became redundant in 1824 ; 
 and the exchanges having been depressed, a drain for 
 gold began to operate upon the Bank of England. The 
 Bank does not appear to have taken any steps for up- 
 wards of a twelvemonth, by contracting her issues, to 
 check the drain ; but being at length compelled, in order 
 to prevent the exhaustion of her coffers, to lessen her 
 paper, a violent revulsion took place. Such of the coun-
 
 30 HISTORICAL SKETCH OF 
 
 try banks — and they were a numerous class — as had been 
 originally established without sufficient capital, and such 
 as had conducted their business upon erroneous principles, 
 began to give way the moment they experienced an 
 increased difficulty of obtaining pecuniary accommoda- 
 tions in London. The alarm once excited, soon became 
 general ; and confidence and credit were, for a while, 
 almost wholly suspended. In the short space of six weeks, 
 above seventy banking establishments were destroyed, not- 
 withstanding the very large advances made to them by the 
 Bank of England ; and the run upon the Bank, for cash to 
 supply the exigences of the country banks, was so heavy, 
 that she was well nigh drained of all the coin in her coffers, 
 and obliged, as already remarked, to issue about a million 
 of one and two pound notes. 
 
 In order to guard against a recurrence of the wide- 
 spread mischief and ruin, produced by this and the pre- 
 vious bankruptcies of the country banks, it was resolved, 
 in 1826, with consent of the Bank of England, to 
 make a change in the law of 1708, limiting the number of 
 partners in banking establishments to six only. And it 
 was accordingly enacted, that henceforth any number of 
 partners might form themselves into associations, to carry 
 on the business of banking, any where not within sixty-Jive 
 miles of London. The Directors of the Bank of England 
 came, at the same time, to the resolution of establishing 
 branches in some of the principal towns ; and, at this 
 moment, branch-banks are established in Gloucester, Man- 
 chester, Birmingham, Leeds, Liverpool, Bristol, Exeter, 
 Newcastle-on-Tyne, Hull, Norwich, &c.* 
 
 * See Appendix, C, for an account of the total amount of the outstanding 
 claims on the Bank of England, and of her funds for discharging the same, on 
 the 30th of January, 1819, as given in the Keport of the Committee of the 
 House of Commons, on the Resumption of Cash Payments.
 
 THE BANK OF ENGLAND. 31 
 
 The branch-banks cannot fail of being highly useful. 
 But we believe that the benefit expected to result from 
 the formation of joint stock banks, will not be nearly 
 so great as has been anticipated. Even were they 
 organised in all large towns, which there is but little 
 reason to expect, seeing that every individual taking 
 a share in one of them, is bound, to the whole ex- 
 tent of his fortune, for their engagements, the lesser 
 towns and country districts would be left to deal with 
 the inferior description of banks. But, supposing them 
 to be universally established, so long as every one 
 is allowed to issue notes without any sort of check 
 or control, a thousand devices may be fallen upon, 
 to ensure a certain circulation to those that are most 
 worthless. At best, this measure is but a feeble palliative 
 of inveterate disorders. It is quite illusory to expect to 
 make any real improvement upon the system of country 
 banking in England, by the mere introduction of a 
 plan for allowing banking establishments with large capi- 
 tals, to be set on foot. There have always been, and are 
 at this moment, a great number of such establishments in 
 England. What is really wanted, is the adoption of a 
 system, that will exclude the possibility of notes being 
 discredited, by preventing all individuals or associations 
 from issuing such as have not been previously guaran- 
 teed. 
 
 Besides attempting to lessen the frequency of bank- 
 ruptcy among the country banks, by repealing the law 
 limiting the number of partners, it was farther resolved, in 
 1826, to prohibit the future issue of one pound notes. 
 The policy and effects of this measure, have given rise to 
 much dispute. It seems clear, that it will go far to 
 shut up one of the most convenient channels by which 
 the inferior class of country bankers contrived to get
 
 32 HISTORICAL SKETCH, &c. 
 
 their notes into circulation, and will, in so far, do good. 
 But there are many other channels that are still open to 
 them ; and to imagine that this measure will place the 
 provincial currency on that solid basis on which it ought 
 to be placed, is quite visionary. There were no notes 
 under 51. in circulation in 1792; and yet iwWy one-third 
 of the country banks then in existence became bankrupt ! 
 The truth is, as already stated, that it is not possible 
 to guard against loss and fraud, from the proceedings 
 of the country bankers, otherwise than by compelling 
 them to give security for their issues; and, as security 
 may as easily be given for \l. notes as for those of 5/., 
 the suppression of the former does not appear to have 
 been at all essential. No doubt can, however, be enter- 
 tained, that the representations as to the extreme injury 
 occasioned by the withdrawal of the \l. notes, have been 
 very greatly exaggerated ; — though it is at the same time 
 obvious, that the means of the bankers to make advances, 
 as well as the profit derived from making them, must both 
 have been diminished by the suppression of the small 
 notes ; and it would be foolish to deny, that this circum- 
 stance must have occasioned some loss and inconvenience • 
 to many individuals. 
 
 These remarks are meant to apply only to the case of 
 the country banks. The extraordinary extent to which 
 the forgery of the U. notes of the Bank of England was 
 carried, affords, perhaps, a sufficient vindication of the 
 policy of their suppression. But the comparatively 
 limited circulation of the country banks, and, perhaps we 
 may add, the greater attention paid to the manner in 
 which their notes were engraved, hindered their forgery 
 from becoming injuriously prevalent.
 
 33 
 
 CHAP. III. 
 
 Bank of England in its Connexion tvith Government 
 and the Public. 
 
 The Bank of England conducts the whole banking busi- 
 ness of the British government. " It acts not only," says 
 Dr. Smith, " as an ordinary bank, but as a great engine of 
 state. It receives and pays the greater part of the annui- 
 ties, which are due to the creditors of the public ; it cir- 
 culates Exchequer bills ; and it advances to government 
 the annual amount of the land and malt taxes, which are 
 frequently not paid till some years thereafter." 
 
 The greater part of the paper of the Bank has gene- 
 rally, indeed, been issued in the way of advances or loans 
 to Government, upon security of certain branches of the 
 revenue, and in the purchase of Exchequer bills and bul- 
 lion ; but her issues through the medium of discounts 
 to individuals have, notwithstanding, been considerable. 
 Among the papers laid by the Bank before Parlia- 
 ment in 1797, was a scale of the cash and bullion in 
 her coffers during every quarter of a year, for several 
 years previously to the restriction. In this scale the real 
 numbers were not given ; and it was some time before it 
 was ascertained what was the actual value of the numbers 
 of which the proportional values only were expressed. At 
 length, however, it was discovered that in the scale of cash 
 and bullion, the number 660 represented four millions; 
 and that in the scale of bills discounted, the unit was two 
 
 c
 
 34 
 
 CONNEXION OF THE 
 
 millions. The key being thus found, the real amounts of 
 cash and bullion in the possession of the Bank, and of bills 
 discounted, were easily computed, and were, during the 
 undermentioned periods, as follows : — 
 
 Account of Cash and Bullion in the Bank, Bills Discounted, and 
 Advances to Government, from March, 1793, to Feb. 26th, 1797. 
 
 Dates. 
 
 Cash and 
 
 Bills 
 
 Average Advance 
 
 Bullion in hand. 
 
 Discounted. 
 
 to Government. 
 
 
 £ 
 
 £ 
 
 £ 
 
 1793 March . . . 
 
 3,508,000 
 
 4,817,000 
 
 8,735,200 
 
 June .... 
 
 4,412,000 
 
 5,128,000 
 
 9,434,000 
 
 September . 
 
 6,836,000 
 
 2,065,000 
 
 9,455,700 
 
 December . 
 
 7,720,000 
 
 1,976,000 
 
 8,887,500 
 
 1794 March . . . 
 
 8,608,000 
 
 2,908,000 
 
 8,494,100 
 
 June .... 
 
 8,208,000 
 
 3,263,000 
 
 7,735,800 
 
 September . 
 
 8,096,000 
 
 2,000,000 
 
 6,779,800 
 
 December . 
 
 7,768,000 
 
 1,887,000 
 
 7,545,100 
 
 1795 March . . . 
 
 7,940,000 
 
 2,287,000 
 
 9,773,700 
 
 June .... 
 
 7,356,000 
 
 3,485,000 
 
 10,879,700 
 
 September . 
 
 5,792,000 
 
 1,887,000 
 
 10,197,600 
 
 December . 
 
 4,000,000 
 
 3,109,000 
 
 10,863,100 
 
 1796 March . . . 
 
 2,972,000 
 
 2,820,000 
 
 11,351,000 
 
 June .... 
 
 2,582,000 
 
 3,730,000 
 
 11,269,700 
 
 September . 
 
 2,532,000 
 
 3,352,000 
 
 9,901,100 
 
 December . 
 
 2,508,000 
 
 3,796,000 
 
 9,511,400 
 
 1797 February 26th 
 
 1,272,000 
 
 2,905,000 
 
 10,672,490 
 
 Subsequently to 1797, the advances to Government were 
 still larger. They were, during the five years ending with 
 1818, as follows: — 
 
 1814 
 1815 
 1816 
 
 30,149,000 I 1817 
 26,494,000 1818 
 23,544,000 I 
 
 27,347,000 
 28,061,000* 
 
 In 1819 provision was made for reducing the amount of 
 these advances ; and they are not at present, excluding 
 the advance on account of the dead weight, much above a 
 third of their amount in 1818. It should also be observed. 
 
 * These are the averages of the total advances on the 26th February, and 
 the 26th August, each year.
 
 BANK WITH GOVERNMENT. 35 
 
 that during the greater part of the war the advances were 
 not nearly so great, and did not indeed reach eighteen mil- 
 lions until the latter part of 1811. 
 
 In point of fact, however, a very large part of these ad- 
 vances has been nominal only, or which is the same thing, 
 has been virtually cancelled by the balances of public money 
 in the hands of the Bank. Thus, from 1806 to 1810, both 
 inclusive, the average advances to Government amounted 
 to 14,492,970/. But the average balance of public money 
 in the possession of the Bank during the same period, 
 amounted to about 11,000,000/. ; so that the real advance 
 was equal only to the difference between these two sums, 
 or to about 3,500,000/. This statement completely nega- 
 tives, as Mr. Tooke has justly stated, the supposition so 
 commonly entertained and reasoned upon as a point be- 
 yond doubt, that the Bank was rendered, by the restric- 
 tion, a mere engine in the hands of Government for faci- 
 litating its financial operations.* 
 
 The Bank being enabled to employ the greater part of 
 the balances of public money in her hands as capital, they 
 have formed one of the main sources of the profit she has 
 derived from her transactions with the public. This sub- 
 ject was brought very prominently forward in the Second 
 Report of the Committee of the House of Commons on 
 Public Expenditure in 1807. And it was agreed in the 
 same year, that the Bank should, in consideration of the 
 advantages derived from the public balances, continue the 
 loan of three millions made to Government in 1800 for six 
 years, without interest, on the same terms, till six months 
 after the signature of a definitive treaty of peace. In 
 1816 this sum was finally incorporated with the debt due 
 
 • First Letter to Lord Grenville, p. 64. 
 
 c 2
 
 36 CONNEXION OF THE 
 
 by Government to the Bank, at an interest of three per 
 cent. In 1818 the public balances had fallen to about 
 seven millions; and they have been still further reduced, 
 in consequence of measures that were then adopted. In 
 1825 they amounted at an average to 5,247,314/. ; and in 
 1829, to 3,862,656/. 
 
 A part of the public balances is formed of the divi- 
 dends payable at the Bank but unclaimed. The balance 
 arising: from this source has sometimes amounted to above 
 a million; but in 1808 and 1811, arrangements were 
 made by which the balances growing out of this fund have 
 been much reduced. 
 
 Previously to 1786, the Bank received an allowance on 
 account of the management of the public debt, that is, for 
 trouble in paying the dividends, superintending the transfer 
 of stock, &c. of 562Z. 10s. a million. In 1786, this allow- 
 ance was reduced to 450/. a million, the Bank being, at the 
 same time, entitled to a considerable allowance for her trou- 
 ble in receiving contributions on loans, lotteries. Sic. This, 
 however, had been long regarded as a very improvident 
 arrangement on the part of the public ; but it was ac- 
 quiesced in till 1808, when the allowance on account of 
 management was reduced to 340/. a million on 600 mil- 
 lions of the public debt ; and to 300/. a million on all that 
 it exceeded that sum, exclusive of some separate allow- 
 ances for annuities, &c. The impression, however, seems 
 still to be entertained, that the allowances for management 
 should be further reduced. * 
 
 It is necessary, however, to observe that the responsibility 
 
 * See Appendix, D. for an account, printed by order of the House of 
 Commons, (12th March, 1830), of the sums paid by the public to the Bank, 
 for the management of the public debt during the year 1829.
 
 BANK WITH GOVERNMENT. 37 
 
 and expense incurred by the Bank in managing the public 
 debt are very great. The temptation to the commission of 
 fraud in transferring stock from one individual to another, 
 and in the payment of the dividends, is well known; and 
 notwithstanding the skilfully devised system of checks 
 adopted by the Bank for its prevention, she has frequently 
 sustained very great losses by forgery and otherwise. In 
 1803 the Bank lost, through a fraud committed by one 
 of her principal cashiers, Mr. Astlett, no less than 
 300,000/. And our readers are all aware of the larse 
 sums she recently lost by the forgeries of Fauntleroy the 
 banker. 
 
 The total sum paid by the public to the Bank on account 
 of loans raised, exchequer bills funded, transfer of three 
 and a half per cent, stock, &.c. from 1793 to 1820, both 
 included, amounted to 426,795/. Is. lid. —(Pari. Paper, 
 No. 81, Session 1822). 
 
 Besides the transactions already alluded to, the Bank 
 entered, on the 20th March, 1823, into an engagement 
 with Government with respect to the public pensions and 
 annuities, or as they have been more commonly termed the 
 dead weight. At the end of the war the naval and mili- 
 tary pensions, superannuated allowances, &c. amounted 
 to above five millions a year. They would, of course, have^ 
 been gradually lessened and ultimately extinguished by 
 the death of the parties. But it was resolved, in 1822, to 
 attempt to spread the burden equally over the whole 
 period o{ fort i/ -Jive years, during which it was calculated 
 the annuities would continue to decrease. To effect this 
 purpose it was supposed that upon Government offering to 
 pay 2,800,000/. ayear for forty-five years, capitalists would 
 be found who would undertake to pay the entire annuities, 
 according to a graduated scale previously determined upon, 
 making the first year a payment of 4,900,000/., and gradu-
 
 38 CONNEXION OF THK 
 
 ally decreasing the payments until the forty-fifth and last 
 year, when they were to amount to only 300,000/. This 
 supposition was not, however, realised. No capitalists 
 were found willing to enter into such distant engagements. 
 But in 1823 the Bank agreed, on condition of receiving an 
 annuity of 585,740/. for forty-four years, commencing on 
 the 5th April, 1823, to pay, on account of the pensions, &c. 
 at different specified periods, between the years 1823 and 
 1828, both inclusive, the sum of 13,089,419/. 
 
 The Bank discounted private bills at five per cent, 
 during nearly the whole period from her establishment till 
 1824, when the rate was reduced to 4 per cent. In 1826 
 it was raised to 5 per cent. ; but was again reduced to 4 per 
 cent, in 1828, at which it continues. It may well be 
 doubted, however, whether the rate of discount ought not 
 to be more frequently varied, as occasion may require. 
 When the currency happens, from any cause, to become 
 redundant, its contraction, always a matter of some diffi- 
 culty, is to be effected only by the sale of bullion or 
 public securities by the Bank, or by a diminution of the 
 usual discounts, or all. But were the Bank to throw 
 any considerable amount of public securities upon the 
 market, the circumstance would be apt to excite alarm ; 
 and even though it did not, it would be difficult to dispose 
 of them without a heavy loss. Hence, when a reduction 
 is determined upon, it is most commonly effected partly by a 
 contraction of discounts. And, it is plain, that such 
 contraction cannot be made except by rejecting altogether 
 some of the bills sent in for discount, or, which is in effect 
 the same thing, by shortening their dates, or by raising the 
 rate of interest, so that fewer may be sent in. Of these 
 methods, the last seems to be, in every respect, the most 
 expedient. When bills are rejected for no other reason 
 than that the currency may be contracted, the greatest
 
 BANK WITH GOVERNMENT. 39 
 
 injury is done to individuals, who, entertaining no 
 doubt of getting their usual accommodations from the 
 Bank, may have entered into transactions which they 
 are thus deprived of the means of completing. Were 
 the reduction made by raising the rate of interest, 
 it would principally affect those who are best able to 
 bear it; at the same time that its operation, instead of 
 being, like the rejection of bills, arbitrary and capricious, 
 would be uniform and impartial. It does, therefore, seem 
 that the Bank should never throw out good bills that she 
 may contract her issues ; but that when she has resolved 
 upon such a measure, she should, provided the contraction 
 cannot be made by the sale of bullion and public 
 securities, raise the rate of discount. The Bank can- 
 not, however, act in the way now suggested so long as 
 the usury laws are in existence ; and this circumstance 
 forms a powerful argument in favour of their repeal. 
 But if it should be deemed hazardous (though we 
 cannot see in what the hazard would consist), totally 
 to annihilate these laws, there can, it is plain, be nothing 
 to fear from exempting the Bank from their operation. 
 She does not advance money to the landlords. They, 
 therefore, could be nowise affected by her raising the rate 
 of discount; and it must be admitted by every one, that 
 it would be infinitely more for the advantage of the mer- 
 cantile class, that she should be allowed to do this, than 
 that she should be driven, as is every now and then 
 the case, under the present system, to the necessity of 
 arbitrarily rejecting good bills. 
 
 The dividends on Bank stock, from the establishment 
 of the company to the present time, have been as fol- 
 lows ; —
 
 40 
 
 CONNEXION OF THE BANK 
 
 Dividends on Bank Stock, from the Establishment of the Company 
 to the present time. 
 
 Years. 
 
 Dividend. 
 
 Years. 
 
 Dividend. 
 
 1694 
 
 8 per cent. 
 
 Lady-day 1747 
 
 5 per cent. 
 
 1697 
 
 9 — 
 
 Ditto 1753 
 
 4i — 
 
 1708 ) 
 1729 5 
 
 Varied from 9 
 
 Michaelmas 1753 
 
 5 — 
 
 to 5| per cent. 
 
 Lady-day 1754 
 
 4-i - 
 
 Lady-day 1730 
 
 6 — 
 
 Michaelmas 1764 
 
 5 — 
 
 Michaelmas 1730 
 
 H — 
 
 Ditto 1767 
 
 5^ - 
 
 Lady-day 1731 
 
 6 — 
 
 Ditto 1781 
 
 6 — 
 
 Michaelmas 1731 
 
 H - 
 
 Lady-day 1788 
 
 7 — 
 
 Lady-day 1732 
 
 6 — 
 
 Ditto 1807 
 
 10 — 
 
 Michaelmas 1732 
 
 ^ - 
 
 Ditto 1823 
 
 8 — 
 
 Previously to 1759, the Bank of England issued no 
 notes for less than 201. She began to issue ten pound 
 notes in 1759 ; five pound notes in 1793 ; and one and two 
 pound notes in March, 1797. 
 
 The Bank of England does not allow, either at the 
 head office in London, or at her branches, any interest 
 on deposits. But it would be exceedingly desirable were 
 she to make some alteration in this respect. The want 
 of the power readily to invest small sums productively, 
 and, at the same time, with perfect security, tends to 
 weaken the motives to save and accumulate. Nothing- 
 has contributed more to diffuse a spirit of economy, and 
 a desire to save, amongst all classes of the population of 
 Scotland, than the readiness with which deposits of small 
 sums are received by banks of undoubted solidity in 
 that part of the country, and the allowance of interest 
 upon them. This advantage is in some degree, indeed, 
 secured in England, by the institution of savings banks. 
 These, however, are but a very inadequate substi- 
 tute. They are not open to all classes of depositors ; 
 and of those to whom they are open, no one can deposit 
 more than 501. the fii'st year, and 30/, every subsequent 
 year, until he has deposited 200/., when no more is 
 received. But it is desirable that every facihty should
 
 WITH GOVERNMENT. 41 
 
 be given to safe and profitable investments. " Were the 
 English Banks, like the Scotch Banks, to receive deposits 
 of 10/. and upwards, and allow interest upon them at about 
 one per cent, less than the market rate, they would confer 
 an immense advantage upon the community, and open a 
 source of profit to themselves. This is, in fact, a part of 
 the proper business of a bank. A banker is a dealer in 
 capital, an intermediate party between the borrower and 
 the lender. He borrows of one party, and lends to 
 another; and the difference between the terms at which 
 he borrows and those at which he lends, is the source of 
 his profit. By this means, he draws into active operation 
 those small sums of money which were previously unpro- 
 ductive in the hands of private individuals, and at the 
 same time furnishes accommodation to another class, who 
 have occasion for additional capital to carry on their 
 commercial transactions."* 
 
 In further corroboration of what has now been stated, 
 it may be mentioned that it was estimated by a very well- 
 informed witness (Mr. J. G. Craig), before the Lords' 
 Committee, on Scotch and Irish banking, in 1826, that 
 the deposits in the Scotch banks, at that period, amounted 
 to about 24,000,000/., of which more than a half con- 
 sisted of sums from 10/. to 200/. ! This is a most satis- 
 factory proof of the vast importance of the system. Per- 
 haps it is not going too far to affirm, that but for the 
 receiving of deposits by the Banks, and the allowing of 
 interest upon them, not one-third of the sums under 200/., 
 and not one half of those above it, would ever have been 
 accumulated. 
 
 [See Appendix, F. for an account of the amount of Bank of 
 England notes, post bills, &c., in circulation since 1790]. 
 
 • See Cilbart's Practical Observations on Banking, p. 52.
 
 42 PROLONGATION OF 
 
 CHAP. IV. 
 
 Prolongation of the Bank Charter. 
 
 The question as to the prolongation of the charter of 
 the Bank, is one of the very highest importance. Its 
 decision cannot fail materially to affect the interests of 
 the public as well as those of the Bank Corporation. 
 
 According to the existing law. Banks, for the issue of 
 notes, may be established, with any number of partners, 
 at any place above Q5 miles distant from London. Hence 
 the practical, or rather, indeed, the only questions for con- 
 sideration, with reference to this subject, are. Whether 
 should the privilege of issuing notes in London be con- 
 ceded to all individuals, or ought it to be confined, as 
 hitherto, to some one body? and if the latter. Whether 
 should that one body be the Bank of England ? 
 
 I. With respect to the question as to the issue of 
 notes in London, it may be observed, that but little light 
 can be thrown upon it, by observing what has taken 
 place in Scotland, and other places, where banking is 
 free. The transactions carried on throughout the pro- 
 vinces are all of a very subordinate description. The 
 currency issued by one provincial bank may displace that 
 which is issued by another ; but no changes of this sort, 
 how important soever they may be to the parties imme- 
 diately interested, can exercise any considerable influence 
 over the great mass of the currency of the country. 
 Nothing can affect this, without affecting the foreign 
 exchanges ; and, consequently, without affecting the 
 currency of London. No doubt it is true that the cur- 
 rency of the latter may be, and in fact has been more 
 than once, rendered redundant by an over-issue of country
 
 THE BANK CHARTER. 43 
 
 paper; for, such over-issue, tends, by displacing London 
 paper in the country, and forcing it back upon its issuers 
 here, to contract the sphere of its circulation, and to 
 render it excessive. But such an over-issue of country 
 currency as would affect the currency of the metro- 
 polis, and produce a depression of the exchange, could 
 not be caused by the competition, or the excessive issue 
 of the provincial banks of one district, but must be the 
 result of their generally over-issuing, as was the case 
 in 1825. It is to no purpose, therefore, to contend that 
 because the competition incident to a free system of 
 banking is productive of no public inconvenience, but the 
 reverse, in Edinburgh, Glasgow, or Manchester, it would 
 be equally innocuous or beneficial in London. Were one 
 Edinburgh bank, by discounting on lower terms than 
 its neighbours, or in any other way, to get a large quan- 
 tity of its paper into circulation, and to render the cur- 
 rency of Edinburgh redundant, it would not cause a de- 
 mand for gold on the banks in that city, and the exchange 
 upon London would merely be somewhat depressed. 
 And supposing the Edinburgh banks to be all in good 
 credit, no material inconvenience would result from this 
 even to themselves; while it is quite obvious it would 
 occasion no sort of inconvenience to any individual in 
 any other part of the country. But were such a thing 
 to be done in London, the case would be totally different. 
 London is the centre to which all the pecuniary trans- 
 actions of the different parts of the empire are brought to 
 be finally adjusted ; and it is the place at which almost 
 all foreign bills of exchange are made payable. And 
 hence, whatever causes any disturbance, however slight, 
 in the value of its currency, is not only felt in the re- 
 motest corners of the empire, but afiects, either sooner 
 or later, the foreign exchanges ; so that every under-
 
 44 PROLONGATION OF 
 
 taking of a commercial nature in which we happen 
 to be engaged, at home and abroad, is subjected to vicis- 
 situde. Nothing, in fact, can be more perfectly nuga- 
 tory than to contend, that, because one species of bank- 
 ing succeeds well in one place, it will succeed equally 
 well in all other places. Were the pecuniary trans- 
 actions of London and Edinburgh similar, it might be 
 fairly predicted that a banking system that answered 
 in the one could hardly fail of answering in the other. 
 But when, instead of being similar, the nature and extent 
 of the pecuniary transactions of the metropolis are as 
 different from those of Edinburgh, or of any provincial 
 town, as light from darkness, it does, to say the least of 
 it, seem not a little inconsequential to argue, that the 
 same power of issuing notes that has been advantageously 
 conceded to the Scotch bankers, may be with equal 
 advantage conceded to those of London. 
 
 Although, therefore, we are not, either in this or any 
 similar investigation, to neglect the lights furnished by 
 experience, which is, indeed, the only guide to rely upon 
 in such matters, it must be such an experience as is really 
 applicable to the circumstances of the case in question ; 
 and to such, luckily, we are able to refer. We know 
 what the conduct of the Bank of England has been ; and 
 we also know what the conduct of banking establishments, 
 in competition with each other, has been, and what, we 
 may add, it cannot fail to be. 
 
 So long as the Bank of England is subjected to the 
 obligation of paying her notes in specie on demand, so long 
 are her interests and those of the public identified. If she 
 starve the circulation by issuing too few notes, their place 
 is supplied with gold, and the Bank loses the profit 
 she might have made upon their issue ; while, upon the 
 other hand, if she over issue, a portion of her paper is
 
 THE BANK CHARTER. 45 
 
 eventually returned upon her for payment, and, in order 
 that she may stop the drain upon her coffers, she reduces 
 her notes afloat to the proper quantity. We do not pre- 
 tend to say that the Bank has immediately acted in the 
 way now stated, whenever the currency has been either 
 deficient or redundant. It is certain, however, that she 
 never acted otherwise, without injuring her own interests 
 more than she injured those of any one else. Her con- 
 duct in 1824, and the greater part of 1825, was censurable, 
 inasmuch as she did not make any reduction of her issues, 
 notwithstanding the continued exportation of bullion, and 
 the wild projects that were then universally entertained, 
 shewed, in the clearest manner, that the currency was 
 redundant. The mistake of the Directors proceeded, we 
 believe, from their erroneously ascribing the demand for 
 bullion to commercial causes, and supposing that by con- 
 tracting their issues they would occasion great mercaVitile 
 distress, without stopping the drain. But, from what- 
 ever source it proceeded, the error was most injurious 
 to the Bank, which was brought into a state of con- 
 siderable danger. We have, therefore, the best of all 
 securities — the only one, indeed, on which the least stress 
 can be laid — the plain and obvious interest of the parties 
 concerned, that such mistakes will not be of frequent 
 occurrence. Whatever else may be thought of the Bank 
 Directors, no one ever presumed to doubt that they are, 
 as they are bound to be, honestly desirous of promot- 
 ing the interests of their establishment. And so long as 
 the system of cash payments is continued, it is demonstra- 
 ble, that that conduct which is most for the advantao;e of 
 the Bank, is also most for the advantage of the country. 
 AVhen it is the interest of the Bank that the amount of 
 paper afloat should be increased, such is also the interest 
 of the public, and precisely the same identity obtains
 
 46 PROLONGATION OF 
 
 when it is for the interest of the Bank that it should be 
 diminished. Without, therefore, giving the Directors 
 credit for more than ordinary sagacity, we feel satisfied, 
 that while they are obliged to pay their notes on demand, 
 nothing is to be apprehended from their proceedings. A 
 regard to themselves, without looking to any thing higher, 
 will keep them in the right path. Do what they will, it 
 is not in their power to benefit the Corporation, without, 
 at the same time, benefiting the public, nor to injure the 
 latter, without, at the same time, injuring the former. 
 
 The statements now made, do not rest on any arbitrary 
 or supposed grounds, but on the most comprehensive 
 experience. From the beginning of last century, down to 
 1797, the notes of the Bank of England were payable in 
 specie on demand ; and during that whole period, it 
 would be difiicult to point out any particular instant when 
 they were in excess, and impossible to point out one in 
 which it could be truly said, that they were in such excess 
 as to occasion any public inconvenience. 
 
 Such being the identity between the interests of the 
 Bank of England and those of the public, as to the issue 
 of notes, we have next to inquire, whether any such iden- 
 tity would obtain between the interests of the public and 
 other bankers, were several establishments for the issue of 
 notes opened in London. It will be very easy to shew that 
 it would not. 
 
 Let it be supposed, in the first place, that two or more 
 banks for the issue of notes are opened in London ; either 
 they would act in concert, or they would not. If they 
 did act in concert, they would be, to all intents and pur- 
 poses, one establishment, with different places for carrying 
 on business. But the government of such an establish- 
 ment would be clumsy in the extreme ; and while its
 
 THE BANK CHARTER. 47 
 
 defects are obvious, it is difficult to discover any advan- 
 tage it would afford to the public, that is not afforded 
 by the Bank of England. 
 
 It is, however, sufficiently certain, were the power of 
 issuing notes in London conceded to every one, that bank- 
 ing establishments would not act in concert ; and though the 
 contrary has been strenuously maintained, it is not diffi- 
 cult to shew, that how advantageous soever competition 
 may be in most cases, it would, in this peculiar case, be 
 most disastrous. Suppose, to illustrate what has now 
 been stated, that a bank in good credit endeavours, either 
 by discounting at a lower rate of interest than the rest, or 
 by any other means, to increase its business j it could not 
 fail, in doing so, to render the whole currency of the 
 metropolis redundant, and to bring on such a drain for 
 bullion, as might be productive of the most mischievous 
 consequences. If the currency were previously at its 
 proper level, any increased issue on the part of any single 
 bank, in unquestionable credit, must plainly produce, in 
 a greater or less degree, the effects now stated ; for, if the 
 currency be already full, the addition of more must make 
 it run over, that is, it must lead to a depression of the ex- 
 change and a demand for bullion. It has been said, no doubt, 
 that such a result could not happen ; that the notes of the 
 over-issuing bank would be immediately returned upon it ; 
 and that a regard for its own interests would make it 
 adopt a different line of conduct. There is not more, 
 however, than the shadow of a foundation for this state- 
 ment. Though plausible in appearance, it contradicts 
 and confutes itself. Were it really true, it would follow 
 that the paper currency of no country in which there 
 are different banks, could ever be redundant so long as 
 any of them acted on a sound system, and, indeed, 
 that no new bank could ever be established in such
 
 48 PROLONGATION OF 
 
 a country ! Perhaps it is not necessary to say more, 
 to shew the fallacy of such a statement ; but as this 
 is a matter of vital importance in the discussion of 
 this question, let us suppose that there are ten banks, 
 all enjoying equal and unbounded credit, established 
 in London, for the issue of notes, and that they 
 have issued 1 ,000,000/. each : suppose, farther, that one 
 of these establishments thinks proper, with a view to some 
 purpose or interest of its own, to increase its issues to 
 2,000,000/.: the currency of the metropolis, assuming it to 
 have been previously at its proper level, will, of course, 
 become redundant and there will be a fall of the ex- 
 change, and a demand for gold. It is clear, however, from 
 the fact of the over-issuing bank being in quite as high 
 credit as any of the others, that only the same propor- 
 tion, or 10 per cent, of its notes, will be returned upon it 
 for payment, that will be returned upon the others, so that 
 when the exchange has recovered itself, and the drain has 
 ceased, it will have 1,818,000/. afloat, and the other banks 
 909,000/. each. 
 
 That such would be the case, no one can reasonably doubt. 
 A merchant sees, from the depression of the exchange, that 
 the currency is redundant ; and as all notes are, under the 
 circumstances supposed, equally good in his estimation, 
 he sends those in for payment that come first to hand. 
 It is no business of his, to inquire whether the redundancy 
 of currency be occasioned by the proceedings of the bank 
 A, or the bank B ; neither, perhaps, could he ascertain 
 the fact, though he were to take the trouble of inquiring 
 into it ; and though he did, it would make no change 
 upon his conduct. So long as he believes the different 
 notes to be alike good, he will shew no preference to 
 one more than to another, but will return them indiscrimi- 
 nately upon their issuers, while he can make a profit 
 by doing so.
 
 THE BANK CHARTED. 4Q 
 
 Thus it appears, that were several banks for the issue 
 of notes established in London, it would bs in the power 
 of any one opulent bank, to occasion a heavy drain for 
 bullion, and great distress and embarrassment through- 
 out the country. All that would be required to produce 
 these results would be, that she should add considerably 
 to the amount of her issues. And she might do this for 
 various objects — to realise an immediate profit; to obtain a 
 great ultimate accession of business, by submitting to the 
 risk of an immediate sacrifice; to weaken and embarrass 
 her rivals, &c. It would be to no purpose, that all the 
 other establishments conducted their business in the 
 soberest manner and on the soundest principles ; their 
 forbearance could not prevent them from being materially 
 injured by the proceedings of this single establishment, 
 and some of them would certainly be tempted to en- 
 deavour to repair the injury done them by acting in the 
 same way. 
 
 It would therefore seem, that that free system which 
 we have been taught to consider as capable of eradi- 
 cating all the evils that have hitherto been attached to 
 banking, is one that, if introduced into London, would 
 aggravate them a thousand-fold. It would give to igno- 
 rance, craft, and rapacity, the ascendancy over skill, inte- 
 grity, and liberality : the former would have an almost 
 unlimited power of doing mischief; the latter, little or no 
 power of doing good. 
 
 It may be said perhaps that the preceding statement is 
 not true except on the hypothesis that the exchanges are 
 immediately affected by an increase of the currency of 
 London, whereas they are only eventually affected by its 
 over-issue causing an over-issue of country paper, and 
 operating upon prices. In point of fact, however, the 
 result is the same either way. The over-issuing bank 
 
 D
 
 60 PROLONGATION OF 
 
 must necessarily deal with the public on terms more advan- 
 tageous to them than her rivals ; and this circumstance 
 would effectually disable the latter from counteracting 
 her operations, except by following a similar line of con- 
 duct. Private bankers not issuing notes, bill brokers, 
 &c., as well as private merchants, would all find it 
 for their advantage to deal with a bank that discounted 
 on lower terms, or gave greater facilities than the rest ; 
 so that the notes of such bank might in the end, pro- 
 vided the others did not give the same facilities, gain so 
 much upon their's as nearly to drive them out of the field. 
 To whatever extent the notes of the over-issuing bank 
 were returned upon it by the others, to the same extent 
 would these others accumulate bullion ; and their profits 
 being lessened by this increase of their unproductive 
 stock, by the loss of customers attracted to the over- 
 issuing bank, and by its notes supplanting theirs, there 
 cannot be a question that some, perhaps most of them, 
 would imitate its example. Under a system of this sort 
 we should, every now and then, have precisely the same 
 kind of competition among the banks of the metropolis 
 that took place among the country banks in 1825. The 
 only difference would be that when the recoil did take 
 place, it would be a thousand times more severe j and 
 that not only private, but also public credit, would run a 
 great risk of being destroyed. 
 
 If it be stated, by way of objection to the principles 
 here laid down, that any restriction upon the issue of 
 paper, is contrary to and subversive of the principle of 
 the freedom of industry, we answer, that this principle 
 is subordinate to others. Freedom is valuable only as a 
 means to an end ; and whenever it can be shewn that that 
 end — the sulus populi, or public advantage — will be best 
 secured by the imposition of restrictions, they ought, un-
 
 THE BANK CHARTER. 51 
 
 questionably to be imposed. There are not many absolute 
 principles in political science; that is, there are not many 
 that will admit of being laid broadly down and rigidly 
 enforced at all times and places. The prevention of 
 all private individuals from issuing coins, and the com- 
 pelling of all weights and measures of the same de- 
 nomination to be made of the same weight and magni- 
 tude, are restraints upon the free exercise of industry; but 
 does any one presume to contend that they are not of the 
 very highest utility ? In most businesses, the greatest 
 freedom of competition may be allowed, because every 
 individual may be fairly supposed to be a better judge of 
 what is advantageous for himself than any one else ; and 
 because, whatever tends most to advance the interests of 
 individuals, tends most, in the great majority of cases, 
 to advance those of the public. But in the operations 
 of banking, this principle can be admitted only under 
 certain modifications. It is, or it may be supposed 
 to be, for the interest of a banker to issue as many notes 
 as possible ; but if, while pursuing his own interest in 
 his own way, he issue so many as to depress the exchange 
 and cause a drain for bullion, he subjects, not his 
 brother bankers only, but the whole country to a con- 
 siderable and certain inconvenience. We have previously 
 seen that it is indispensable, in order to prevent the 
 grossest frauds, to interdict the issue of all notes, unless 
 their issuers give security for their payment. And we 
 have now seen that it is further indispensable, in order 
 to prevent the exchange from being depressed, the credit 
 of the country injuriously affected, and its commer- 
 cial transactions thrown into inextricable confusion, by 
 the selfish or mistaken proceedings of individuals, to con- 
 fine the power of issuing paper in London to a single body, 
 which will consequently have the means of regulating the 
 
 »2
 
 52 PROLONGATION OF 
 
 quantity of notes afloat, and may be made responsible to 
 Parliament for its conduct. 
 
 But the statements hitherto made, serve only to give a 
 very incomplete view of the injurious consequences that 
 would infallibly follow from multiplying banks of issue in 
 London. 
 
 In periods of distress and discredit, arising out of a 
 falling exchange, whether that fall be brought about by 
 previous over-issue, bad harvests, demands upon the trea- 
 sury from abroad, or any other cause, the mercantile 
 classes are placed in a situation of great difficulty, and 
 require efficient support. The Bank of England, aware of 
 the demands that will be made upon her in such a crisis, 
 and that she alone will have to uphold the pecuniary sys- 
 tem of the metropolis and the country, takes care to have, 
 generally speaking, her coffisrs well supplied with coin and 
 bullion ; and is able, from her immense command of cash 
 and credit, and the confidence placed in her by all classes^ 
 to meet a severe drain for gold, and, at the same time, to 
 render effectual support to private bankers, merchants, &c. 
 But were there various banks issuing paper in London, 
 then, as no particular bank would incur any sort of general 
 or public responsibility, all of them would act only with a 
 view to their own interest, in the literal and most con- 
 tracted sense of the term. They would not endeavour, 
 like the Bank of England, to provide large supplies of 
 cash and bullion against any emergency ; but each being 
 naturally disposed to trust as much, in a matter of thi& 
 sort, to the efforts of others as to its own, the chances are 
 ten to one that there would be a most inadequate provision 
 to meet a fall of the exchange. But although such were 
 not the case, it is sufficiently certain that no private bank 
 would, at such a moment, venture to support its customers.
 
 THE BANK CHARTER. 53 
 
 either in the city or the country, by making advances to 
 them. The stocks of coin and bullion in all the banks 
 would necessarily be very much reduced by the drain fov 
 gold from abroad, so that the idea of their making an 
 advance in coin would be out of the question. There is, 
 however, quite as little probability that they would be dis- 
 posed to make advances in paper, seeing that whatever 
 portion of such paper came into the hands of any other 
 bank, would be forthwith returned upon them ; for each 
 bank, anxious about nothing but its own safety, would be 
 desirous of increasing its own supply of bullion, which it 
 could only do at the expense of its neighbours; and it is 
 easy, indeed, to see that the stoppage of any bank would 
 be inevitable, which did not husband its resources with the 
 utmost care. The consequences of a considerable fall of 
 the exchange with a number of banks in London would, in 
 truth, be quite frightful. Every one knows the ruin occa- 
 sioned by the crisis in the latter part of 1825 and the 
 beginning of 1826; but we hesitate not to say, that that 
 ruin was trifling in the extreme, compared with what it 
 would have been, had the paper currency of London been 
 then supplied by different establishments. At the period 
 in question, the Bank of England made loans upon the 
 credit of funded and other property, which had become 
 quite unsaleable, to the extent, we believe, of about ten 
 millions ; and those acquainted with the facts of the case 
 will be forward to admit, that but for this opportune and 
 liberal supply, the ruin of most private bankers, and of a 
 very large part of the mercantile class throughout the 
 country, would have been consummated. It would, how- 
 ever, be worse than absurd to suppose that any such 
 advance, or any thing approaching to it, would have been 
 made by a number of banks, all jealous of each other, 
 with scanty stocks of bullion, dreading the return of their
 
 54 PROLONGATION OF 
 
 notes, and exempted from any public responsibility. We 
 submit that, were there nothing more to be urged, what 
 we have now stated is completely decisive, as to this 
 part of the question. In legislating upon this momen- 
 tous subject, it must be remembered that we are not 
 legislating only for fair-weather periods, when the ex- 
 changes are at par or rising, and every thing in the com- 
 mercial world is apparently sound and prosperous ; but 
 that we are also legislating for periods when the harvests 
 have failed, when the exchanges are falling, and suspicion 
 and discredit are abroad. It is then, when funded pro- 
 perty is a drug, that extra assistance is required in the 
 capital for the support of both pi'ivate and public credit ; 
 and if it be not promptly and liberally afforded, both may 
 be destroyed. A banking system fitted only for a period 
 of prosperity, and unable to sustain itself and to assist 
 the country in times of distress and difficulty, is as ill cal- 
 culated for the great purposes it should serve, as the 
 paper cannons of the Chinese for being used in war. 
 
 The example of the Scotch banks may here be referred 
 to. They are most liberal of their advances so long as 
 they conceive they run no risk in making them ; but 
 the moment that alarm and discredit begin to make their 
 appearance, they demand payment of every advance that 
 is not made on the very best security; they cease in a 
 great measure to discount; and provide for their own 
 security by ruining thousands of their customers. Had 
 the Bank of England acted in 1792, 1815 and 1816, and 
 in 1825 and 1826, as the Scotch banks act when they 
 apprehend a return of their notes, all classes would have 
 been involved in bankruptcy, and we should have been 
 fortunate had we escaped a revolution ! 
 
 Similar results arc said to be exhibited in the State of 
 Massachusetts, the banking system of which has received
 
 THE BANK CHARTER. 55 
 
 some encomiums in this country. We learn, from the 
 best authority, that in Massachusetts the oscillations in 
 the quantity of paper afloat are very sudden and violent, 
 and have been productive of most injurious consequences. 
 It does, therefore, seem to us to be quite clear, that 
 to avoid risking the total overthrow of commercial credit, 
 in periods when there is a want of confidence and a falling- 
 exchange, it is indispensable that the paper currency of 
 London should continue, as at present, to be supplied by 
 only one bank. Such a bank having the command of very 
 large funds, and enjoying an unlimited degree of credit, 
 is able to make large advances; and its notes being readily 
 accepted all over the country, immediately fill up the gap 
 occasioned by the withdrawal or discredit of the notes of 
 any of the provincial banks ; so that with its assistance, 
 the currency may be contracted and the exchange brought 
 to par, with comparative facility. But were there a variety 
 of banks here, none of them would enjoy any portion of 
 that consideration which, now, attaches to the single 
 ** Bank of England." Messrs. A. of Lombard Street, 
 Messrs. B. of Cheapside, and Messrs. C. of Birchin Lane, 
 may be very excellent persons, and of undoubted solidity 
 upon Change; but the squires, farmers, tradesmen, and 
 clodpoles of the country, know them not ; and would as 
 soon think of taking one of Dan O'Connell's as their notes 
 instead of cash. And hence, though the metropolitan 
 bankers were disposed to accommodate their provincial 
 correspondents with an advance of notes, it would be of 
 no use to them : unless they sent them sovereigns, which 
 they neither would nor could send, they could render them 
 no support. And a provincial banker might thus be 
 obliged, from inability to procure pecuniary support in the 
 capital, or to sell Government securities, except at a 
 ruinous loss, to stop payments, even supposing his fortune
 
 56 PROLONGATION OF 
 
 to be three or four times as great as the amount of his 
 obligations. 
 
 We have heard that several of the country bankers are 
 hostile to the Bank of England, and are desirous that 
 every one should have povirer to issue paper in London. 
 This report may be true ; but we take leave to say, that 
 the country bankers are far more interested in the support 
 of the Bank of England, than any other class whatever. 
 They all look to her for support when there is a run upon 
 themselves, and the funds are depressed ; and were that 
 support withheld, the greater number of them would make 
 one exhibition in the Gazette and be heard of no more. 
 The country bankers cannot but be aware of this; and we, 
 therefore, do not believe that they are recommending the 
 folo de se policy in question. 
 
 We have previously shewn that one of the most serious 
 defects in our present system of currency consists in the 
 circumstance of the country banks being obliged to give 
 specie for their notes. This has the effect, in all periods 
 of panic and alarm, of forcing the country banks to make 
 heavy demands for gold upon the Bank of England ; who 
 is in fact compelled to provide specie not only to meet the 
 demands of the holders of her own notes, but also of the 
 holders of the notes of the country banks. It was the 
 necessities of the latter that occasioned the difficulties 
 in which the Bank found herself involved early in 1826, 
 when she was well nigh exhausted of her gold ; not 
 because her own issues were excessive, but because all 
 the country bankers fell back upon her coffei's for sup- 
 plies of coin. To obviate this source of loss and of 
 danger, not only to the stability of the Bank but to the 
 whole financial system of the country, nothing more is 
 necessary than to enact that country notes shall be payable 
 only in notes of the Bank of England ; for as the Bank's
 
 THE BANK CHARTER. 57 
 
 notes are themselves immediately convertible into specie, 
 all over-issue would be as effectually prevented in this 
 way as in that which is actually adopted. Such a plan, by 
 enabling the Bank to make advances to country bankers, 
 in periods of discredit, with far less inconvenience than at 
 present, would powerfully contribute to their stability. But 
 to do this would be impossible, were the Bank deprived of 
 the exclusive privilege of issuing notes in London. No 
 establishment would then possess power to elevate the ex- 
 changes when they were depressed ; and as the deprecia- 
 tion caused by the over-issue of one bank would equally 
 affect the issues of all the others, it would be out of the 
 question to attempt rendering the paper of any of them 
 legal tender for that of the country banks. And hence, if 
 we would have this great reform effected in the state of 
 the currency — and few could be made upon it of greater 
 importance — it is essential that only one body be allowed 
 to issue notes in London. 
 
 IL It being thus, we think, satisfactorily established 
 that it would be highly inexpedient to allow to more than 
 one body the privilege of issuing notes in London, we have 
 next to inquire what this body ought to be. And it is 
 universally admitted that, under the circumstances sup- 
 posed, we have only to choose between the Bank of 
 England and a National Bank, or a Bank established 
 by Government, and responsible only to it. 
 
 Those who argue in favour of the establishment of a 
 National Bank, rely principally on the saving which they 
 think it might be made to produce to the public. The 
 interest of the capital of 14,686,000/. lent by the Bank of 
 England to Government at 3 per cent., amounts to 440,000/. 
 a year, there being besides, as already seen, a sum of about 
 260,000/. a year paid to the Bank for managing the public
 
 o8 PKOLONGATION OF 
 
 debt; and it is contended that were a National Bank 
 established, both these sums, amounting together to 
 700,000/. a year, might be saved to the public. It is clear, 
 however, that the stamp duty of about 80,000/. a year 
 payable by the Bank of England, and the expense of 
 managing a National Bank, which might probably be 
 estimated at 300,000/.,* making together 380,000/., must 
 be deducted from the above sum of 700,000/ ; and we 
 believe we may safely add to the deductions to be made 
 from the supposed gains, a further sum of 100,000/. a year 
 for the expense to which the National Bank would be put 
 in procuring supplies of bullion and coin, and in regu- 
 lating her issues ; so that the entire gain resulting from 
 the supposed change could not amount, on the most ex- 
 aggerated estimate, to above 220,000/. 
 
 But the more we consider this subject, the more are we 
 satisfied that the establishment of a National Bank would 
 be a most unwise measure, and that instead of being pro- 
 ductive of any advantage, it could not fail to occasion 
 very great loss and inconvenience. 
 
 In the Jirst place it may be observed, that it would be 
 idle to expect from the agents of Government, however 
 conscientious, the same watchful attention to the affairs of 
 
 * This may seem a high estimate ; but, in truth and reaUty, it is consider- 
 ably below the mark. Every one knows that the business at the Bank of 
 England is conducted with infinitely more economy than at the East-India- 
 House, the Custom-IIouse, or any other Government Office. But, notwith- 
 standing, the Bank employs at this moment about 900 clerks, which, aver- 
 aging their salaries at only 200^., is 180,000/. a year. And if to this we add 
 the payments on account of superannuations, stationery, house and other 
 expenses, the sum we have named will appear inadequate to defray the current 
 expenses of the establishment, without setting down any thing on account of 
 the cost of the building. This, however, is an item that must not be 
 forgotten ; and no reasonable man will pretend to contradict us when we say, 
 tliat Government could not purchase a site for a National Bank so convenient 
 as that of the Bank of England, and construct the requisite buildings upon it, 
 for less than 1,500,000/., or 2,000,000/.
 
 THE BANK CHARTER. 69 
 
 a National Bank, that is paid by the Directors of the Bank 
 of England to that establishment. The heavy losses 
 which the Bank has not unfrequently sustained, notwith- 
 standing the vigilance of its officers, through the forgery 
 and frauds committed upon it in its capacity of public 
 banker, would, there is every reason to think, be still 
 greater in the case of a National Bank. And were such 
 really the case, the insecurity thence arising might be pro- 
 ductive of much mischief. 
 
 In the second place, the circumstance of the Directors 
 of the Bank of England being principally merchants, 
 largely engaged in commercial transactions, and inti- 
 mately acquainted with the state of credit in London and 
 the country, has enabled them to carry on the business 
 of discounting to a considerable extent, and to make those 
 immense advances in periods of discredit, which have sus- 
 tained the commercial and financial interests of the country. 
 But a National Bank could not be conducted in this way. 
 It would be indispensable, in order to prevent, not the 
 actual occurrence merely, but even the suspicion of par- 
 tiality and abuse in the management of its affairs, that its 
 functionaries should be interdicted from engaging, either 
 directly or indirectly, in mercantile affairs. The business 
 of discounting would have to be left entirely to private in- 
 dividuals ; and the employment of the Directors of the 
 National Bank would have to be strictly confined to the 
 receipt and payment of all monies due to and by Govern- 
 ment; and to the payment of their notes when presented. 
 It is plain, however, that if the Directors of the National 
 Bank were deprived of the power of discounting, they 
 would have no means of contracting or enlarging their 
 issues except by the purchase or sale of bullion, exchequer 
 bills, and other Government securities. But occasions 
 might, and indeed it is perfectly certain would arise, when
 
 60 PROLONGATION OF 
 
 either from political or commercial causes, the exchange 
 might be so much affected as to render it impossible to 
 bring it to par, by selling or buying bullion and stock, 
 without producing ruinous fluctuations in the price of the 
 latter. We look upon the power of modifying the issue of 
 paper, by enlarging or decreasing the sums advanced 
 upon discount, as quite essential to those having to con- 
 trol the quantity of paper afloat in London ; and as such 
 a power could not be conceded to managers appointed by 
 Government, without giving birth to every species of 
 jobbing and abuse, we consider this very circumstance as 
 conclusive against the scheme of erecting a National 
 Bank. 
 
 In the third place, were a National Bank established. 
 Government would be converted into a species of money 
 scrivener, and would be directly implicated in the pecu- 
 niary affairs of individuals. Besides unfolding 
 
 "the drift of hollow states hard to be spelled," 
 
 it would have to fathom the mysteries of the Jews and 
 jobbers of Capel Court. ' If the price of funded property 
 were depressed in consequence of sales made by the 
 National Bank, those who suffered by such fall would 
 ascribe the injury done them to the improper agency of 
 Government, who would, in this way, be exposed to per- 
 petual obloquy. Neither is it to be denied that the insti- 
 tution of a National Bank would afford great facilities for 
 improper dealings in the funds, on the part of those con- 
 nected with the Treasury and with its managers. Such 
 persons being aware of the measures to be adopted by the 
 Bank, might be tempted to purchase or sell stock in antici- 
 pation of purchases or sales by it; even though they did 
 neither they would stand an extreme chance of having
 
 THE BANK CHARTER. 61 
 
 such conduct imputed to them ; and every one knows that 
 such imputation would be highly injurious. 
 
 It may be said, perhaps, that the Directors of the Bank 
 of England have the same facilities for improper dealings, 
 and that, notwithstanding, it has on no occasion been so 
 much as insinuated that they ever availed themselves, in 
 their business transactions, of the information they acquired 
 in the Bank parlour. But the circumstances under which 
 the Bank Directors are chosen, and the responsibilities 
 under which they are placed, are widely different from 
 those that would obtain in the case of the Directors of a 
 National Bank. The former, speaking generally, are pos- 
 sessed of good fortunes ; thev are selected because of their 
 extensive mercantile experience, and make it a point of 
 honour neither to act upon, nor to communicate to others 
 the resolutions agreed to by them in their capacity of Di- 
 rectors, previously to their being published. Need we say, 
 that the managers of a National Bank would be of a very 
 different character ? They would owe, like similar public 
 functionaries, their appointments, not to their fitness for 
 the office, but to its suitableness for them ; instead of 
 being already rich, they would be for the most part poor j 
 ruined merchants, perhaps, or younger sons without pa- 
 trimony ; and it is all but certain, that the point of honour 
 amongst them would be to make the most of their situ- 
 ation, and that he wotild be best esteemed who amassed 
 the largest fortune. 
 
 We believe this to be a fair representation of what 
 would really happen were the change now under discus- 
 sion carried into effect. At all events, however, no one 
 can deny that the statements we have made are all pos- 
 sible, and may easily be realised. Why, then, should we, 
 in a matter of such vital importance, abandon a system of 
 banking with which we are well acquainted, for one that
 
 62 PROLONGATION OF 
 
 is wholly untried, and which may, and most probably 
 would, lead to the most mischievous results ? A very 
 competent authority with respect to such matters, Mr. 
 John Smith, speaking of the Bank Directors in the debate 
 in the House of Commons, on the 20th of February, 1826, 
 expressed himself as follows : — 
 
 " He would defy any man to shew, in the history of the 
 commercial world, a more strict personal integrity than 
 was to be found in the conduct of the Directors, in the 
 whole of their money transactions with the public. He 
 would take for instance, the period of 1816, when the 
 Bank was deriving enormous profits, and when they divided 
 the immense sum of 25 per cent, upon their capital stock ; 
 a circumstance, the previous knowledge of which would 
 have made the fortune of any individual; and yet, on 
 examining the books, not a single Director was found to 
 have possessed one shilling more of stock than was neces- 
 sary to his being constituted a Director according to the 
 charter. The whole of the gentlemen who composed the 
 directory of that establishment were men of the highest 
 character and soundest principle ; and were every way 
 worthy of the respect and confidence of the country." 
 
 If, then, the privilege of the Bank of England be taken 
 away, to be conceded to the Managers of a National Bank, 
 it will not be true to say, that we are leaving the ' ills 
 we suffer to fly to others which we know not of.' We 
 shall be leaving a system which long experience has 
 shewn is founded on sound principles, and which is con- 
 ducted by honest and intelligent men, for one that is 
 wholly unknown, but which, in as far as dependence may 
 be placed on reasonings from analogy, may be pro- 
 nounced, even were it well managed, extremely hazardous, 
 and which would most likely be perverted to .unworthy 
 purposes.
 
 THE BANK CHARTER. 63 
 
 111 the fourth place, a National Bank would be sub- 
 servient at all times to the views of Government. The 
 Bank of England has not, jDerhaps, on some occasions, 
 turned a sufficiently deaf ear to the solicitations of the 
 minister. But whatever may have been her failings in 
 this respect, the cajolings and flirtations of the Treasury 
 have had but little influence over her, compared to what 
 they would have over the easy virtue of the Managers of a 
 National Bank. Not one in ten of the Bank Directors 
 owes any thing to INIinisters, or is expecting to gain any 
 thing by their favour. If they consent to their proposals, 
 it is because they believe them to be advantageous to the 
 Bank and the public, or because they are naturally disin- 
 clined to oppose any serious obstacles to the Government 
 service. But the Managers of a National Bank, owing, 
 as they must, directly or indirectly, their appointments to 
 the Treasury, and being accountable to it only for their 
 proceedings, what possible motive could they have to 
 refuse any thing that ministers asked ? Had a National 
 Bank existed in 1796 and 1797, does any one suppose that 
 its Managers would have opposed so determined a resistance 
 as was made by the Bank Directors to Mr. Pitt's demands 
 for money? or that they would have been so urgent for a 
 diminution of the balances due to the Bank ? The public 
 may be assured that the moment a National Bank is esta- 
 blished, that moment has the Treasury acquired an unli- 
 mited control over the currency of the country. And how 
 honestly soever Ministers may be inclined, it would be too 
 much to suppose that in periods of difficulty they should 
 be slow to avail themselves of so ready a means of obtain- 
 ing momentary assistance, without very carefully weighing 
 the ultimate consequences of their conduct. 
 
 The very question we are now considering, as to the 
 policy of establishing a National Bank, was lately sub- 
 mitted to the consideration of a Committee of Congress of
 
 64 PROLONGATION OF 
 
 the United States. The Report of that Committee is 
 an able and instructive document: it shews clearly, that 
 the institution of a National Bank would be most mis- 
 chievous; that the Ministry would have, in fact, the 
 entire management of the Bank; that it would eventually 
 degenerate into a mere financial and political engine ; that 
 it would be abused in order to promote party purposes ; 
 and would necessarily become a focus for every sort of 
 corruption and intrigue. Let us not be so blind to our 
 own defects as to imagine, that though a National Bank 
 might be thus noxious in the United States, it would here 
 be productive only of advantage. Jonathan and John 
 Bull are, we take it, very much upon a par as to purity in 
 money matters. 
 
 Mr. Ricardo, who advocated the plan of a National 
 Bank, appears to have flattered himself that he had fallen 
 upon a device for rendering its Managers independent of 
 the Treasury ! This is the more singular, as Mr. Ricardo 
 justly ridicules Mr. Pitt for imagining that he had hit 
 upon a scheme that would protect the Sinking Fund from 
 being seized upon in any emergency. Surely, however, 
 it was at least as easy a task to prevent the sacrifice 
 of the Sinking Fund to immediate conveniency, as to 
 prevent a National Bank from being made subservient 
 to Treasury purposes. And if Mr. Pitt completely failed 
 in his attempt to secure the inviolability of the former, 
 what prospect is there that any better success would attend 
 the efforts of Lord Althorp, supposing he were so very ill- 
 advised as to make them, to secure the independence of 
 the latter ? * 
 
 * Sir Henry Parnell is by far the ablest and most distinguished of those who 
 have advocated the policy of throwing open the trade of banking in London. 
 But though ingenious, his arguments on this subject do not seem to us to be at 
 all satisfactory or conclusive. This is not, however, to be ascribed to any want 
 of science or ability on his part, but to the badness of the cause he has undcr- 
 lakeu to defend.
 
 THE BANK CHARTER. 65 
 
 We think that, by this deduction, we have completely 
 established two points. First, that it is indispensable, in 
 order to prevent the most ruinous consequences, to confine 
 the power of issuing notes in London and its environs to 
 one set of individuals. Second, that it would be highly in- 
 expedient to open a National Bank in London for the issue 
 of notes ; and that sound policy would suggest that the 
 Bank of England should be allowed to continue in pos- 
 session of the monopoly she now enjoys, subject, of 
 course, to any modifications that may be deemed proper 
 for promoting the public interests. 
 
 We have already shewn that it would be extremely 
 desirable, were it possible, to introduce into the Bank the 
 system of giving interest upon deposits. We do not pre- 
 sume to say positively whether it can be done, as we 
 believe diflSculties may attach to the system here which 
 do not affect it in Scotland. But we are well convinced 
 that if it be practicable, few things would redound 
 more to the public advantage than its adoption by the 
 Bank ; and we have no doubt that the Directors will be 
 inclined, were the subject brought properly before them, 
 to consider it in the most favourable manner. 
 
 We incline also to think, that it would be a very mate- 
 rial improvement could the Bank of England conveniently 
 adopt the Scotch system of granting Cash-Credits. By 
 a credit of this sort is meant, an undertaking on the part 
 of a bank to answer the drafts of an individual in whose 
 character they have confidence, and who has produced 
 one or two securities, provided these drafts do not exceed 
 a specified amount. This amount is not, however, ad- 
 vanced by way of permanent loan. No one obtains a 
 cash-credit unless he be engaged in business, or has a 
 certain extent of pecuniary dealings. Those who have 
 
 E
 
 66 PROLONGATION OF 
 
 such credits no sooner receive any money than they 
 pay it to the bank to their credit account; being allowed 
 a certain rate of interest on the balance when it is in 
 their favour, and paying to the bank about one per cent, 
 higher interest when it is against them. This is an ex- 
 ceedingly convenient mode of accommodating the public. 
 It induces them to send in the smallest sums to the 
 bank, at the same time that it provides for the cii'- 
 culation of its notes, and renders all its cu-stomers far 
 more interested in its support than they would be were 
 they merely in the habit of discounting with it, or of 
 using it as a place for the custody of money. It is sup- 
 posed that the total amount of cash credits, granted by 
 the Scotch banks, amounts to about Jive millions, of 
 which one-third may, at an average, be advanced by the 
 banks. This plan of making advances, and the giving of 
 interest on deposits, constitute the peculiar excellences of 
 the Scotch system, and have certainly been productive 
 of great public advantage. 
 
 It has been supposed that a further deduction might 
 be made from the allowances to the Bank, for managing 
 the public debt. The great risk, and heavy responsibility 
 incurred by the Bank, justly entitle her to a liberal 
 remuneration. Still, however, it does appear that on 
 this head some saving might be made to accrue to the 
 public. 
 
 An opinion is very prevalent, and to a certain extent 
 well-founded, that a good deal would be gained were 
 greater publicity given to the aiFairs of the Bank of Eng- 
 land and the country banks, by making them render 
 returns of the amount of their issues, &c. In so far, how- 
 ever, as the country banks are concerned, the only thing 
 that is necessary to guarantee the public from loss, is to 
 oblige them to give security for their notes ; and if this
 
 THE BANK CHARTER. 67 
 
 be not done, no sort of publicity that it is possible to 
 devise, can be of any material use. The case of the Bank 
 of England is different ; publicity as to some of her trans- 
 actions would be of considerable service. We confess, 
 however, that we see very little ground for concluding 
 that any material advantage would result from the adop- 
 tion of the proposal so often made, of obliging the Bank 
 to publish weekly or monthly accounts of her issues. No 
 one could learn from them, whether the Bank paper 
 afloat was really redundant or deficient, or whether its 
 diminution or increase might be anticipated. The demand 
 for money is not constant. It is very much influenced by 
 the state of the crops, of trade, credit, &c. ; the fluc- 
 tuations naturally incident to it being so very great, that 
 while, at one time, an issue of 18,000,000/. of Bank notes 
 may be quite ample, at another time, and under other 
 circumstances, an issue of 28,000,000/. may not be more 
 than enough. The demand for bullion, and the state of the 
 exchange, are the only tests that it is safe to rely upon, 
 by which to judge when the Bank issues are, or are not 
 at their proper level. And therefore, we think it would 
 be good policy to stipulate, that the Bank should publish 
 a weekly account of the market price of bullion, of the 
 amount of coin and bullion issued by her during the week, 
 and of the amount of both in her possession ; * and also an 
 account of the exchanges with Hamburgh and Paris, 
 stating the per centage for and against London. A publi- 
 cation of this sort, would furnish the mercantile world with 
 authentic and highly useful information. When it was 
 seen that the exchange was falling, and that a drain for 
 bullion had set in upon the Bank, it would be a proof 
 that the currency of London was redundant ; and every 
 
 • This last is the decisive circumstance, and perhaps an account of it 
 might be enough. 
 
 E 2
 
 63 PROLONGATION, ETC. 
 
 prudent banker, in every part of the country, would imme- 
 diately take measures to meet that increased difficulty of 
 obtaining pecuniary accommodations in the metropolis, he 
 might expect to experience, from the Bank's taking mea- 
 sures to check the drain. And when, on the other hand, 
 the exchange was seen to rise and bullion to flow to the Bank, 
 an increased issue of notes, and a greater facility of obtain- 
 ing money might be safely anticipated. Every one being, 
 in this way, made acquainted with the circumstances 
 which must always determine the conduct of the Bank, 
 and the state of the currency of London, most sorts of 
 mercantile speculations would become less hazardous than 
 at present. But it is clear, that no such information could 
 be gained from the mere publication of an account of the 
 amount of Bank notes afloat; though, for some subordi- 
 nate purposes, even that might be useful. 
 
 On the whole, we have little doubt that those who con- 
 sider this question calmly, and without prepossession, 
 will come to nearly the same conclusions that we have 
 done. In renewing the Bank Charter, we hazard 
 nothing. So long as the present system of cash pay- 
 ments is continued, the interests of the Bank and the 
 public are identified ; and we have consequently the best 
 of all guarantees for her concerns being well managed. 
 Every other system that it is possible to suggest is encum- 
 bered with a thousand difficulties. And he is not a wise 
 Minister who would abandon a great public establishment, 
 that has existed for nearly one himdrtd and forty years, 
 and which answers, or may easily be made to answer, 
 every legitimate purpose that a Bank ought to serve, to 
 introduce new establishments in its stead, of which the 
 results, in so far as they can be determined beforehand, 
 may be pronounced injurious alike to individuals and 
 the public.
 
 APPENDIX. 
 
 A. 
 
 A Return of the Number of Persons convicted of Forgery, or passing 
 Forged Notes and Post Bills of the Bank of England, in each Year, 
 from 1791 to 1829, inclusive. 
 
 Years. 
 
 Capital Convictions. 
 
 1791— 179G 
 
 nil. 
 
 1797 
 
 1 
 
 1798 
 
 11 
 
 1799 
 
 12 
 
 1800 
 
 29 
 
 1801 
 
 32 
 
 1802 
 
 32 
 
 1803 
 
 7 
 
 1804 
 
 13 
 
 1805 
 
 10 
 
 1806 
 
 nil. 
 
 1807 
 
 16 
 
 1808 
 
 9 
 
 1809 
 
 23 
 
 1810 
 
 10 
 
 1811 
 
 5 
 
 1812 
 
 26 
 
 1813 
 
 9 
 
 1814 
 
 5 
 
 1815 
 
 8 
 
 1816 
 
 20 
 
 1817 
 
 33 
 
 1818 
 
 62 
 
 1819 
 
 33 
 
 1820 
 
 77 
 
 1821 
 
 41 
 
 1822 
 
 16 
 
 1823 
 
 6 
 
 1824 
 
 5 
 
 1825 
 
 2 
 
 1826 
 
 18 
 
 1827 
 
 24 
 
 1828 
 
 10 
 
 1829 
 
 13 
 
 Convictions tor havine m » i -kt u .> 
 
 Forged Bank No.es „ Total Number of 
 in possession. Convictions each Year. 
 
 The Bank of England docs not possess the means of stating or dis- 
 tinguishing the punishments inflicted for the said crimes.
 
 70 
 
 APPENDIX. 
 
 A (continued). 
 Statement of the Number of Persons convicted of Forgery of all Instru- 
 ments connected with the Chartered and other Banks of Scotland; 
 whether of Bank Notes or Post Bills, Bills of Exchange, or otherwise ; 
 in each Year, from 1791 to 1829 inclusive ; particularizing the Capital 
 Convictions upon which Execution took place, and the Cases of mitigated 
 Punishment. 
 
 
 
 bj) 
 
 L. a 
 
 o 
 1^ 
 
 si 
 
 g 
 
 o 
 
 01 , 
 
 II 
 
 _ a 
 
 a O 
 
 Number where Pains 
 of Law restricted, and 
 Sentence short of Death 
 pronounced. 
 
 111 
 
 111 
 
 Number whose 
 
 Sentences were 
 
 mitigated by 
 
 His Majesty : 
 
 ■a 
 s 
 
 Years. 
 
 ■a 
 
 c 
 o 
 
 s 
 
 E 
 o 
 
 1 
 
 3 
 
 55 
 
 1791 . . 
 
 2 
 
 1 
 
 3 
 
 2 
 
 1 
 
 1 
 
 - 
 
 1 
 
 1792 . 
 1793 
 
 
 2 
 
 - - 
 
 2 
 
 2 
 
 — 
 
 — 
 
 — 
 
 — 
 
 1794 
 
 
 
 
 
 
 
 
 ~ 
 
 z 
 
 
 
 
 
 z 
 
 1795 
 
 
 - 
 
 1 
 
 1 
 
 1 
 
 
 
 
 
 — 
 
 
 
 1796 
 
 
 — 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1797 
 
 
 - 
 
 1 
 
 1 
 
 « 
 
 1 
 
 . 
 
 . 
 
 1 
 
 1798 
 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 
 
 — 
 
 — 
 
 1799 
 
 
 — 
 
 
 
 
 
 
 
 
 
 
 
 — 
 
 
 
 1800 
 
 
 - 
 
 1 
 
 1 
 
 . 
 
 1 
 
 _ 
 
 . 
 
 1 
 
 1801 
 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 — 
 
 1802 
 
 
 1 
 
 - 
 
 1 
 
 1 
 
 
 
 — 
 
 — 
 
 — 
 
 1803 
 
 
 — 
 
 
 
 
 
 
 
 
 
 — 
 
 — 
 
 
 
 1804 
 
 
 1 
 
 . 
 
 1 
 
 1 
 
 
 
 
 
 — 
 
 
 
 1805 
 
 
 2 
 
 - 
 
 2 
 
 . 
 
 2 
 
 . 
 
 - 
 
 2 
 
 1306 
 
 
 - 
 
 2 
 
 2 
 
 . 
 
 2 
 
 - 
 
 2 
 
 
 
 1807 
 
 
 1 
 
 - 
 
 1 
 
 1 
 
 
 
 — 
 
 — 
 
 
 
 1808 
 
 
 — 
 
 — 
 
 — 
 
 
 
 
 
 — 
 
 — 
 
 
 
 1809 
 
 
 1 
 
 . 
 
 1 
 
 1 
 
 
 
 — 
 
 — 
 
 
 
 1810 
 
 
 1 
 
 - 
 
 1 
 
 1 
 
 
 
 ' — 
 
 
 
 
 
 1811 
 
 
 2 
 
 . 
 
 2 
 
 1 
 
 1 
 
 - 
 
 1 
 
 
 
 1812 
 
 
 — 
 
 — 
 
 
 
 
 
 
 
 
 
 
 
 .^ 
 
 1813 
 
 
 3 
 
 3 
 
 6 
 
 5 
 
 1 
 
 - 
 
 . 
 
 1 
 
 1814 
 
 
 1 
 
 4 
 
 5 
 
 3 
 
 2 
 
 . 
 
 . 
 
 2 
 
 1815 
 
 
 2 
 
 . 
 
 2 
 
 2 
 
 
 
 
 
 
 
 1816 
 
 
 2 
 
 . 
 
 2 
 
 1 
 
 1 
 
 . 
 
 _ 
 
 1 
 
 1817 
 
 
 1 
 
 2 
 
 3 
 
 2 
 
 1 
 
 . 
 
 . 
 
 1 
 
 1818 
 
 
 1 
 
 2 
 
 3 
 
 2 
 
 1 
 
 . 
 
 1 
 
 
 
 1819 
 
 
 4 
 
 3 
 
 7 
 
 6 
 
 1 
 
 . 
 
 1 
 
 
 
 1820 
 
 
 3 
 
 1 
 
 4 
 
 4 
 
 
 
 
 
 
 
 
 
 1821 
 
 
 2 
 
 9 
 
 11 
 
 7 
 
 4 
 
 - 
 
 2 
 
 2 
 
 1822 
 
 
 2 
 
 3 
 
 5 
 
 5 
 
 
 
 — 
 
 
 
 
 
 1823 
 
 
 - 
 
 10 
 
 10 
 
 5 
 
 5 
 
 . 
 
 3 
 
 2 
 
 1824 
 
 
 3 
 
 10 
 
 13 
 
 12 
 
 1 
 
 — 
 
 . 
 
 1 
 
 1825 
 
 
 1 
 
 8 
 
 9 
 
 9 
 
 — 
 
 
 
 
 
 
 
 1826 
 
 
 3 
 
 20 
 
 23 
 
 23 
 
 . 
 
 1 
 
 
 
 
 
 1827 
 
 
 2 
 
 25 
 
 27 
 
 25 
 
 2 
 
 . 
 
 1 
 
 1 
 
 1828 
 
 
 4 
 
 27 
 
 31 
 
 31 
 
 
 
 
 
 
 
 
 
 1829 
 
 
 2 
 
 17 
 
 19 
 
 19 
 
 — 
 
 — 
 
 — 
 
 — 
 
 
 49 
 
 150 
 
 199 
 
 172 
 
 27" 
 
 2 
 
 11 
 
 16 
 
 Edinburgh, 
 
 
 Ceitifi 
 
 ed by 
 
 J 
 
 A. Anderson, 
 
 18th Jun 
 
 3, 18 
 
 30. 
 
 
 
 
 Depute 
 
 Clerk c 
 
 f Justici 
 
 ary.
 
 APPENDIX. 
 
 71 
 
 A (continued). 
 A Return of the Number of Perso?is convicted of Forgery on the Bank of 
 England connected ivith the Public Funds, Bills of Exchange, or other- 
 wise, except Bank Notes, ^-c. in each Year, from 1791 to 1829, inclusive. 
 
 CONVICTIONS. 
 
 1790 
 
 1 
 
 1791 
 
 . nil. 
 
 1792 
 
 2 
 
 1793 ■) 
 
 1794 \ . 
 
 1795 y 
 
 
 . nil. 
 
 
 1796 
 
 2 
 
 1797 
 
 . nil. 
 
 1798 
 
 3 
 
 1799 
 
 - nil. 
 
 1800 
 
 1 
 
 1801 
 
 . nil. 
 
 1802 
 
 1 
 
 1803 
 
 1 
 
 1804 
 
 1 
 
 1305 
 
 1 
 
 1806 
 
 . nil. 
 
 1807 
 
 1 
 
 1808 
 
 . nil. 
 
 1809 
 
 1 
 
 CONVICTIONS. 
 
 1810 
 1811 
 1812 
 1813 
 1814 
 1815 
 1816 
 1817 
 1818 
 1819 
 1820 
 1821 
 1822 
 1823 
 1824 
 1825 
 1826 
 1827 
 1828 
 1829 
 
 . 
 
 . nil. 
 
 
 2 
 
 
 . nil. 
 
 
 2 
 
 
 1 
 
 
 . nil. 
 
 
 2 
 
 
 3 
 
 ^ ' 
 
 nil. 
 
 i 
 
 
 } 
 
 nil. 
 
 nil. 
 
 The Bank of England does not possess the means of stating or distin- 
 guishing the Punishments inflicted for the said Crimes. 
 
 Freshfield and Son, 
 Solicitors to the Governor and Company 
 
 of the Bank of England. 
 
 20th May, 1830.
 
 72 
 
 APPENDIX. 
 
 B. 
 
 An Account of the average market price of Bullion in each year, from 
 1800 to 1821, {taken from official documents of the average value per 
 cent, of the currency, estimated by the market price of gold for the same 
 period, and of the average depreciation per cent.). 
 
 Year. 
 
 Average price 
 of gold per oz. 
 
 Average per cent, 
 of the value of 
 the currency. 
 
 Average de- 
 preciation 
 per cent. 
 
 1800 
 
 £.3 17 lOi 
 
 £.100 
 
 Nil. 
 
 1801 
 
 4 5 
 
 91 12 4 
 
 £.878 
 
 1802 
 
 4 4 
 
 92 14 2 
 
 7 5 10 
 
 1803 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1804 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1805 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1806 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1807 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1808 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1809 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1810 
 
 4 10 
 
 86 10 6 
 
 13 9 6 
 
 1811 
 
 4 4 6 
 
 92 3 2 
 
 7 16 10 
 
 1812 
 
 4 15 6 
 
 79 5 3 
 
 20 14 9 
 
 1813 
 
 5 1 
 
 77 2 
 
 22 18 
 
 1814 
 
 5 4 
 
 74 17 6 
 
 25 2 6 
 
 1815 
 
 4 13 6 
 
 83 5 9 
 
 16 14 3 
 
 1816 
 
 4 13 6 
 
 83 5 9 
 
 16 14 3 
 
 1817 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1818 
 
 4 
 
 97 6 10 
 
 2 13 2 
 
 1819 
 
 4 1 6 
 
 95 11 
 
 4 9 
 
 1820 
 
 3 19 11 
 
 97 8 
 
 2 12 
 
 1821 
 
 3 17 10| 
 
 100 
 
 Nil.
 
 APPENDIX. 
 
 73 
 
 An Account of the total Amount of Outstanding Demands on the Bank of 
 England, and liheivise the Funds for discharging the same ; 30tk Jan. 
 1819. 
 
 Dr. - - The Bank, - 
 
 
 £. 
 
 To Bank Notes out. . 
 
 26,094,430 
 
 To other Debts ; viz. 
 
 ^ 
 
 Drawing Accounts 
 
 1 
 
 Audit Roll 
 
 
 Exchequer Bills de- 
 
 V 7,800,150 
 
 posited 
 
 
 And various other 
 
 
 Debts 
 
 J 
 
 
 33,894,580 
 
 Balance of Surplus in 
 
 
 favour of the Bank 
 
 
 of England, exclu- 
 
 
 sive of the Debt 
 
 
 from Government, 
 
 
 at £3 per cent. 
 
 
 £11,686,800. 
 
 1 
 
 And the Advance to 
 
 1 
 
 Government, per 56 
 Geo. III. cap. 96. 
 
 J- 5,202,320 
 
 at £3 per cent. 
 
 J 
 
 £3,000,000. 
 
 £. 
 
 39,096,900 
 
 
 
 By 
 
 30th January, 1819. - 
 
 By Advances on Go- 
 vernment Securi- 
 ties ; viz. 
 
 On Exchequer Bills, 
 on Malt, &c. 1818. 
 
 Bank Loan, 1808. .. 
 
 Supply, 1816, at £4 
 per cent 
 
 Growing Produce of 
 the Consd. Fund to 
 5th April 1819, and 
 Interest due, and 
 Loans to Govern- 
 ment on Unclaimed 
 
 Dividends 
 
 all other Credits ; 
 viz. 
 
 Cash and Bullion . . . 
 
 Exchequer Bills pur- 
 chased, and Inter- 
 est 
 
 Bills and Notes dis- 
 counted . ...... 
 
 Treasury Bills for the 
 Service of Ireland. 
 
 Money lent, and vari- 
 ous other Articles . 
 
 By the permanent Debt 
 due from Government, 
 for the Capital of the 
 Bank, at £3 per cent, 
 per annum 
 
 By the Advance to Go- 
 vernment, per Act 
 56 Geo. III. cap. 96. 
 at £3 per cent, per 
 annum 
 
 Cr. 
 
 £. 
 
 y 8,438,660 
 
 I 
 ) 
 
 ^ 
 
 -30,658,240 
 
 39,096,900 
 
 11,696,800 
 
 3,000,000 
 
 Bank of England, 
 22d February, 1819. 
 
 William Dawfs, 
 
 Accountant General.
 
 74 APPENDIX. 
 
 D. 
 
 An Account of Money paid or payable at the Bank of England, for the 
 Management of the Public Debt, in the year 1829, together tvith an 
 Account of all the allowances made by the Public to the BanTc, or 
 charged by the Bank against the Public, for transacting any Public 
 Service in the year 1829 ; describing the nature of the service, and the 
 Amount charged thereon in the said year, and including any Sum under 
 the denomination of House-money, or House Expenses ; and also, any 
 Sum under the denomination of Charges of Management on South-Sea 
 Stock, and stating the aggregate Amount of the whole. 
 
 Charge for Management of the Unredeemed Puhlic £. s. d. 
 Debt for one year, endhig the 5th April, 1830, being 
 the annual period at which the Accomits are made 
 up, as directed by the Act 48 Geo. 3, c. 4. - 248,417 17 2| 
 
 Ditto, ditto, for one year ending ditto, on sundry An- 
 nuities transferred to the Commissioners for the 
 Reduction of the National Debt, for the purchase 
 of Life Annuities per Act 48 Geo. 3, and subse- 
 quent Acts 2,922 11 9 
 
 Charges of Management, being part of an entire yearly 
 fund of 100,000^. enjoyed by the Governor and Com- 
 pany of the Bank of England, originally by the Act 
 of the 5 th and 6th of William and Mary, c. 20, con- 
 firmed to the said Governor and Company by seve- 
 ral subsequent Acts, and lastly, by the Act of the 
 39th and 40th Geo. 3, c. 28, as per Return made to 
 The Honourable House of Commons, on the 21st 
 June, 1816 - - - - - 4,000 U 
 
 Ditto, ditto, on 4,000,000^. South Sea Stock, purchased 
 by the Governor and Company of the Bank of Eng- 
 land of the South Sea Company, and transferred by 
 them to the said Governor and Company, in pur- 
 suance of the Act of the 8th Geo. 1, c. 21, and 
 which charges of management were assigned by the 
 said South Sea Company, to the said Governor and 
 Company, out of a Sum of 8,397/. 9s. Gd. per annum, 
 then paid by the Public to the said South Sea Com- 
 pany, for charges of management on their funds, as 
 per Return made to The Honourable House of Com- 
 mons, on the 21st June, 1816 - - - 1,898 3. 5 
 
 £. 257,238 12 4|- 
 
 Bank of England, T. Rippon, 
 
 11th of March, 1830. Chief Cashier.
 
 APPENDIX. 75 
 
 E. 
 
 The following is an Account of all Distributions made by 
 the Bank of England amongst the Proprietors of Bank 
 Stock, whether by Money Payments. Transfer of 5 per 
 Cent. Annuities, or otherwise, under the Heads of Bonus, 
 Increase of Dividend, and Increase of Capital, betwixt 
 25th February, 1797, and 31st March, 1830, in addition 
 to the ordinary Annual Dividend of 7 per Cent, on the 
 Capital Stock of that Corporation, existing in 1797, in- 
 cluding therein the whole Dividend paid since June, 1816, 
 on their increased Capital ; stating the Period when such 
 Distributions were made, and the aggregate Amount of 
 the whole. 
 
 In June, 1799 : 
 
 £10 percent. Bonus in 5 per cents. 1797, on 11,642,400/., is £1 ,164,240 
 May, 1801 : 
 
 £5 per cent. diUo, in Navy 5 per cents, ditto . . . 582,120 
 
 November, 1802: 
 
 £2i per cent, ditto, ditto, ditto 291,060 
 
 October, 1804 : 
 
 £5 per cent, ditto, Cash, ditto 582,120 
 
 October, 1805 : 
 
 £5 per cent, ditto, ditto, ditto 682,120 
 
 October, 1806: 
 
 £5 per cent, ditto, ditto, ditto 582,120 
 
 T^ A -1 ir,r,-» . r\ ^ C Increase of Dividend at the rate 
 ^'?l?o^Pu'^'J-^^' '\ of 3/. per cent, per annum on 
 
 1822, both inclusive | n, 642,400/., is, 16 years . . 5,588,352 
 
 T^ A -1 nnno X /-I . r Increase of Dividend at the rate 
 ^'?^.o P," ', ?^' '? of !'• per cent, per annum on 
 
 1829, both inclusive ^ 1 1,642,400/., is, 7 years . . 814,968 
 
 In June, 1816, . • Increase of Capital at 25 per cent, is 2,910,600 
 r. n ir>io . /-^ . r Dividend at the rate of 10/. per 
 *^To? lU ,' '< cent, per annum on 2,910,600/.. 
 
 1822, both inclusive ^ .^creased Capital, is, 6J years . 1,891,890 
 
 T-. A -1 1000 ^ r\ i C Dividend at the rate of 8/. per 
 ^TooPk :, ,' '< cent, per annum on 2,910,600/., 
 
 1829, both inclusive ^ increased Capital, is, 7 years . 1,629,936 
 
 Aggregate Amount of the whole . . 16,619,526 
 
 Annual Dividend payable on Bank Stock in 1797, on a Capital 
 
 of 11,642,400/. at the rate of 7/. per cent, per annum . . 814,968 
 
 Annual Dividend payable since June, 1816, on a Capital of 
 14,553,000/., to October, 1822, inclusive, at the rate of 10/. 
 per cent, per annum ........ 1,455,300 
 
 Annual Dividend payable from April, 1823,to 31st March, 1830, 
 botii inclusive, on a Capital of 14,553,000/., at the rate of 
 8/. per cent, per annum ...... 1,164,240 
 
 William S.meu, Depy. Acct. 
 Bank of England, 26l/i April, 1830.
 
 76 
 
 APPENMX. 
 
 An Account of the Amount of Bank Notes in Circulation on the U7tder~ 
 mentioned Days ; distinguishing the Bank Post Bills, and the Amount 
 of Notes under Five Pounds, with the Aggregate of the whole. 
 
 1792 February 25 
 August 25 
 
 1793 February 26 
 August 26 
 
 1794 February 26 
 August 26 
 
 1795 February 26 
 August 26 
 
 1796 February 26 
 August 26 
 
 1797 February 25 
 August 26 
 
 1798 February 26 
 August 25 
 
 1799 February 26 
 August 26 
 
 1800 February 25 
 August 26 
 
 1801 February 26 
 August 26 
 
 1802 February 26 
 August 26 
 
 1803 February 26 
 August 26 
 
 1804 February 25 
 August 25 
 
 1805 February 26 
 August 26 
 
 1806 February 25 
 August 26 
 
 1807 February 26 
 August 26 
 
 1808 February 26 
 August 26 
 
 1809 February 25 
 August 26 
 
 1810 February 26 
 August 25 
 
 1811 February 26 
 August 26 
 
 1812 February 26 
 August 26 
 
 1813 February 26 
 August 26 
 
 1814 February 26 
 August 26 
 
 1815 February 25 
 August 26 
 
 Notes of £5. 
 and upwards. 
 
 £. 
 
 10,394,106 
 
 10,281,071 
 
 10,780,643 
 
 10,163,839 
 
 10,079,165 
 
 10,060,248 
 
 12,968,707 
 
 10,939,880 
 
 10,266,561 
 
 8,981,645 
 
 8,167,949 
 
 9,109,614 
 
 10,856,188 
 
 9,997,958 
 
 10,576,510 
 
 11,260,675 
 
 13,106,368 
 
 12,221,451 
 
 12,975,206 
 
 11,715,665 
 
 12,038,970 
 
 12,801,746 
 
 11,796,424 
 
 12,413,924 
 
 12,054,943 
 
 11,766,628 
 
 11,403,290 
 
 11,182,188 
 
 11,994,350 
 
 14,141,510 
 
 12,274,629 
 
 15,077,013 
 
 13,746,598 
 
 12,440,930 
 
 12,730,999 
 
 13,255.599 
 
 13,650,592 
 
 16,078,390 
 
 15,110,688 
 
 15,203,611 
 
 14,523,049 
 
 14,873,705 
 
 14,567,267 
 
 14,975,479 
 
 15,632,250 
 
 18,066,180 
 
 16,394,359 
 
 16,332,275 
 
 Bank Post 
 Bills. 
 
 755,703 
 725,898 
 647,738 
 674,375 
 618,759 
 567,972 
 570,456 
 518,502 
 643,133 
 549,690 
 474,615 
 524,587 
 551,549 
 553,236 
 607,907 
 653,766 
 723,600 
 823,366 
 954,982 
 759,270 
 803,499 
 772,577 
 820,039 
 776,030 
 848,894 
 743,841 
 1,029,580 
 718,510 
 725,736 
 702,425 
 724,485 
 725,262 
 742,671 
 795,102 
 944,727 
 880,104 
 907,620 
 1,145,832 
 1,133,419 
 1,016,303 
 1,059,854 
 987,880 
 1,034,882 
 1,015,616 
 1,091,242 
 1,246,479 
 1,184,459 
 1,115,079 
 
 Bank Notes 
 under £5. 
 
 9,34,015 
 1,442,348 
 1,639,831 
 1,451,728 
 1,345,432 
 1,406,708 
 1,690,561 
 2,647,526 
 2,495,386 
 2,616,407 
 3,312,790 
 2,960,469 
 3,846,005 
 4,673,515 
 4,813,525 
 4,801,596 
 4,395,480 
 4,428,360 
 4,228,958 
 4,206,230 
 4,231,837 
 4,103,785 
 4,129,234 
 4,338,951 
 5,221,538 
 5,871,069 
 7,221,953 
 7,140,726 
 7,573,201 
 7,415,294 
 7,621,325 
 7,705,322 
 8,033,774 
 8,371,923 
 9,667,217 
 9,094,552 
 9,576,695 
 
 £. 
 11,149,809 
 11,006,969 
 11,428,381 
 10,838,214 
 10,697,924 
 10,628,220 
 13,539,163 
 11,458,382 
 10,909,694 
 9,531,335 
 8,601,964 
 10,568,216 
 12,850,085 
 12,191,025 
 12,636,145 
 13,259,873 
 15,236,676 
 14,735,378 
 16,577,514 
 14,970,321 
 15,458,876 
 16,887,113 
 15,576,932 
 17,035,959 
 17,577,352 
 17,323,994 
 17,234,466 
 16,296,178 
 17,148,446 
 19,072,893 
 17,205,344 
 20,034,112 
 18,593,054 
 17,365,266 
 18,014,677 
 19,357,241 
 20,429,281 
 24,446,175 
 23,384,833 
 23,723,115 
 22,998.197 
 23,482,910 
 23,307,471 
 24,024,869 
 25,095,415 
 28,979,876 
 26,673,370 
 27,024,049
 
 
 APPENDIX. 
 
 
 77 
 
 
 F (continued). 
 
 
 
 Notes of £5. 
 
 Bank Post 
 
 Bauk Notes 
 
 
 
 and upwards. 
 
 Bills. 
 1,336,467 
 
 under £5. 
 
 TOTAL. 
 
 1816 February 26 
 
 15,307,228 
 
 9,036,374 
 
 25,680,069 
 
 August 26 
 
 16,686,087 
 
 1,286,429 
 
 9,103,338 
 
 27,075,854 
 
 1817 February 26 
 
 17,538,656 
 
 1,376,416 
 
 8,143,506 
 
 27,058,578 
 
 August 26 
 
 20,388,502 
 
 1,712,807 
 
 7,998,599 
 
 30,099,908 
 
 1818 February 26 
 
 19,077,951 
 
 1,838,600 
 
 7,362,492 
 
 28,279,043 
 
 August 26 
 
 17,465,628 
 
 1,627,427 
 
 7,509,782 
 
 26,602,837 
 
 1819 February 26 
 
 16,307,000 
 
 1,622,330 
 
 7,317,360 
 
 25,246,690 
 
 August 26 
 
 16,972,140 
 
 1,468,920 
 
 7,216,530 
 
 25,657,590 
 
 1820 February 26 
 
 15,402,830 
 
 1,421,160 
 
 6,745,160 
 
 23,569,150 
 
 August 26 
 
 16,047,390 
 
 1,633,730 
 
 6,772,260 
 
 24,453,380 
 
 1821 February 26 
 
 14,372,840 
 
 1,615,600 
 
 6,483,010 
 
 22,471,450 
 
 August 26 
 
 16,095,020 
 
 1,634,260 
 
 2,598,460 
 
 20,327,740 
 
 1822 February 26 
 
 15,178,490 
 
 1,609,620 
 
 1,384,360 
 
 18,172,470 
 
 August 26 
 
 15,295,090 
 
 1,610,600 
 
 862,650 
 
 17,768,340 
 
 1823 February 26 
 
 15,751,120 
 
 1,742,190 
 
 683,160 
 
 18,176,470 
 
 August 26 
 
 17,392,260 
 
 1,763,650 
 
 550,010 
 
 19,705,920 
 
 1824 February 26 
 
 17,244,940 
 
 2,198,260 
 
 486,660 
 
 19,929,800 
 
 August 26 
 
 18,409,230 
 
 2,122,760 
 
 443,970 
 
 20,975,960 
 
 1825 February 26 
 
 18,308,990 
 
 2,334,260 
 
 416,880 
 
 21,060,130 
 
 August 26 
 
 17.091,120 
 
 2,061,010 
 
 396,670 
 
 19,548,800 
 
 1826 February 26 
 
 21,100,400 
 
 2,487,080 
 
 1,367,560 
 
 24,955,040 
 
 August 26 
 
 18,172,160 
 
 2,040,400 
 
 1,175,450 
 
 21,388,010 
 
 1827 February 26 
 
 18,787,330 
 
 2,052,310 
 
 668,910 
 
 21,508,550 
 
 August 26 
 
 19,253,890 
 
 2,270,110 
 
 483,060 
 
 22,007,060 
 
 1828 February 26 
 
 19,428,010 
 
 2,329,880 
 
 416,890 
 
 22,174,780 
 
 August 26 
 
 19,016,980 
 
 2,417,440 
 
 382,860 
 
 21,817,280 
 
 1829 February 26 
 
 17,402,470 
 
 2,444,660 
 
 357,170 
 
 20,204,300 
 
 August 26 
 
 17,164,940 
 
 2,030,280 
 
 334,190 
 
 19,529,410 
 
 1830 February 26 
 
 17,862,990 
 
 2,284,520 
 
 320,550 
 
 20,468,060 
 
 Bank of Englanc 
 
 J 
 
 
 Wm. Smee, 
 
 11th March, 182 
 
 0. 
 
 
 D( 
 
 >p. Acct. 
 
 S. Manning & Co., Printers, London-house-ynrd, St. Paul's.

 
 
 -V,, 
 
 ;■/" 
 
 ■'^'^:; 

 
 TjnIvERSITY of ILLINOIS-URBANA 
 
 ^0112 062406910