circulation, but to leave that entirely in the hands of the public. The action of the public was fully sufficient to rectify the exchanges without any forced action on the part of the Bank in buying or selling securities. He thought it desirable to keep the securities very nearly at the same amount, because then the public could always act for themselves in returning notes for bullion for exportation when the exchanges were unfavourable, and if there was a great influx of gold, the Bank could always re-assume its proportion by transferring part of the bullion into securities. He considered that the discount of private paper was one of the worst means which the Bank could adopt for regulating its notes, as it tended to produce a very prejudicial extension of their notes. He condemned strongly the practice of the Bank during the restriction with respect to the extensive discounts of mercantile paper at 5 per cent. when the market rate was much higher, which necessarily led to an excessive issue.

54. The great majority of the witnesses were in favour of a publication of the accounts of the Bank, as tending to inspire greater public confidence than the mystery in which they were then enveloped, and also acting as a check upon the directors themselves. Almost all the witnesses were against the establishment of joint stock banks in London, as they would tend to injure the private bankers. Considering the ideas of the age, when class interests were supreme, we need not be surprised at this unanimity of feeling; nor that it rather escaped the attention of the witnesses that it was not the interests of the private bankers, however respectable they were, that was the paramount consideration, but what was best for the public good. And still more decidedly were the witnesses opposed, with scarcely an exception, to the establishment of any new joint stock banks of issue in London. There was a very prevalent feeling that Bank of England notes should be made legal tender, as a means of allaying a drain on the country bankers for gold during a panic.

55. It was at this time that we may date the first prominent appearance of the great modern heresy, that bills of exchange and cheques form no part of the circulating medium or currency. As this unhappy doctrine, however, was much more emphatically

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pronounced a few years later, we may defer considering it to that period. The committee pronounced no opinion of their own on the various points brought out in the evidence.

56. The harvest of 1832 was unusually abundant, which caused a great depression of the price of all sorts of agricultural produce towards the end of 1832, followed, of course, by "agricultural distress." This was brought before the notice of Parliament in the speech from the throne at the opening of the Session of 1833, and a committee was appointed to inquire into it. This distress afforded the irreconcileable enemies of the Act of 1819 another opportunity of attacking it. Mr. Attwood moved for a committee to inquire how far the present distress was connected with the monetary system. Lord Althorp immediately met the motion by an amendment, that any change in the monetary system which would have the effect of lowering the standard of value was inexpedient, which, after a debate of three nights, was carried by a majority of 304 to 49.

57. On the 31st May, 1833, Lord Althorp moved a series of resolutions for the renewal of the Bank Charter, one of which was, that so long as the Bank was bound to pay its notes in gold, Bank notes should be declared legal tender, except by the Bank itself. Several members wished for further delay to consider the resolutions, as the Session was nearly at an end; but Sir Robert Peel was decidedly of opinion that the House would be abandoning its duty if it consented to postpone the question. He was of opinion that it was desirable to continue. the privileges of the Bank, and that there should be but one bank of issue in the metropolis, in order that it might exercise an undivided control over the issue of paper, and give facilities to commerce in times of difficulty and alarm, which it could not give with the same effect if it were subject to the rivalry of another establishment. He resisted, at great length, the proposition for making Bank notes legal tender, as a departure from the principle of the Act of 1819, and the true principles that should govern a paper currency. It was decided, by a majority of 316 to 83, to proceed with the consideration of the resolutions. The plan of making Bank notes legal tender gave rise to much difference of opinion, but was carried by 214 to 156.

58. We have already seen that the public had attempted, at various times, to form rival banking companies to the Bank of England, and in 1709 and 1742, the Bank Acts had been framed to stop up various loop-holes which had been successively discovered. In 1742, the phraseology used had been supposed to be quite effectual for that purpose. At that time, the custom of giving notes payable to bearer on demand to their customers in return for deposits, was considered so essentially the fundamental idea of banking, that to prohibit the giving of these notes was deemed an effectual bar upon carrying on the business of banking. But in process of time-about 1793-the London bankers discontinued issuing notes payable to bearer on demand. The Act of 1742 was considered to be so effectual a bar upon establishing banking companies in general, that for a long time it escaped public observation that the method of doing business by way of cheques enabled banking companies to elude the wording of the Act of 1742. In 1796, when, in consequence of the restrictive measures of the Bank of England, much distress was felt in London from the want of a circulating medium, an association of merchants and bankers was formed, for the purpose of providing a circulating medium which should not infringe the privileges of the Bank; the question was considered by them, in what the Bank's privileges of exclusive "banking" did consist, and they determined, "The privilege of exclusive banking enjoyed by the Governor and Company of the Bank of England, as defined by the Acts of Parliament under which they enjoy it, seems to consist in the power of borrowing, owing, or taking up money on their bills or notes payable on demand." About the year 1822, some writers detected this flaw in the monopoly of the Bank, and maintained that a joint stock bank of deposit was no infringement of the Charter, and that such banks might be formed, and carry on a very successful business without issuing notes at all, but by merely following the practice of the London bankers by adopting cheques. Though this idea. was much discussed in pamphlets at that period, no practical result ensued.

59. It is somewhat remarkable that the discovery should have been allowed to lie unfruitful for so long a period. When the Government first entered into negotiation with the Bank in 1833,

concerning the terms of the renewal of the Charter, they were persuaded, as well as the whole mercantile community, that the monopoly forbade banks of any description whatever, with more than six partners, being formed. In the course of the negotiation, however, this was brought under the notice of the Government, who took the opinion of their law officers on so important a point. The opinion of the Crown lawyers was that the clause did not prohibit joint stock banks of deposit being formed. The directors and proprietors of the Bank were much disturbed at finding this flaw in their monopoly, and requested the Government to have it rectified; but Lord Althorp said that the bargain was that their privileges should not be diminished, but he would not agree to any extension of them. In order to remove all doubts upon the subject, the Solicitor-General brought up a clause, by way of rider, declaring the right to form such banks. He said that the basis of the contract with the Bank was, that they were to enjoy whatever monopoly they already possessed, but nothing beyond it. He had examined the case with the utmost care, and there was no pretence for saying that such banks were encroachment upon the monopoly of the Bank. The Bank, as originally founded, was a bank of issue, and the monopoly first granted in 1697 must be held to refer only to banks ejusdem generis. Such had been the uniform language of all the subsequent Acts. The clause upon which their monopoly rested was strictly confined to the issue of paper money. Banks of deposit were lawful at common law, and it rested with those who said it was forbidden to point out the Act which prohibited them.

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60. The chief provisions of the Act were as follows (Statute 1833, c. 98)

1. The Bank was continued as a Corporatian, with such exclusive privileges of banking as was given by the Act, for a certain time, and on certain conditions, during which time no society or company exceeding six persons should make or issue in London, or within sixty-five miles thereof, any bill of exchange or promissory note, or engagement for the payment of money on demand, or upon which any person holding the same may obtain payment on demand. But country bankers might have an agency

in London for the sole purpose of paying such of their notes as might be presented there.

2. For the purpose of removing any doubts that might exist as to what the exclusive privilege of banking which the Bank of England enjoyed consisted in, it was enacted that any body politic or corporate, or society or company, or partnership, of whatever number they consisted, might carry on the business of banking in London, or within sixty-five miles thereof, provided that they did not borrow, owe, or take up in England any sum or sums of money on their bills or notes payable on demand, or at any less time than six months from the borrowing thereof, during the continuance of the privileges of the Bank of England.

3. All the notes of the Bank of England, payable on demand, which should be issued out of London, should be payable at the place were they were issued.

4. Upon one year's notice, to be given within six months after the expiration of ten years from the 1st day of August, 1834, and repayment of all debts due by Parliament to the Bank, its privileges were to cease and determine at the end of the year's notice.

5. So long as the Bank paid its notes on demand in legal coin, they were declared to be legal tender of payment, except by the Bank itself, or any of its branches. No notes not made specially payable at any of the branches were liable to be paid there; but the notes issued at all the branches were to be payable in London.

6. Regulations about publishing its accounts, and exemptions of bills and notes not having more than three months to run, from the usury laws-these being altered now, need not be detailed.

7. The public were to pay off one-fourth part of the debt due to the Bank, and the proprietors might reduce the capital stock of the Bank by that sum if they chose.

8. In consideration of these privileges, the Bank was to give up £120,000 a year, from the sum they received for managing the public debt.

61. For several years after the renewal of the Bank Charter the harvests were unusually abundant, which caused all sorts of agricultural produce to be ruinously depressed. Wheat fell