An Account of the successive Renewals of the Charter, of the Conditions under which these Renewals were made, and of the Variations in the Amount and Interest of the Permanent Debt due by Government to the Bank, exclusive of the Dead Weight. 1694. 1697. 1708 1713. 1742. 1764. 1781. 1800. 1833. 1844. Charter granted under the act 5 & 6 Wil. 3. c. 20., redeemable upon the Under this act the Bank advanced to the public 1,200,000Z., in con- Under this act the Bank took up and added to their stock 1,001,1717. Under this act the Bank advanced 400,000. to government, with- Charter continued by 12 Anne, stat. 1. c. 11. till 12 months' notice after ist In 1716, by the 3 Geo. 1. c. 8., Bank advanced to government, at 5 And by the same act, the interest on the Exchequer bills cancelled in 1708 was reduced from 6 to 5 per cent. In 1721, by 8 Geo. 1. c. 21., the South Sea Company were authorised to sell 200,000l. government annuities, and corporations purchasing the same at 26 years' purchase were authorised to add the amount to their capital stock. The Bank purchased the whole of these annuities at 20 years' purchase 5 per cent. interest was payable on this sum to Midsummer, 1727, and thereafter, 4 per cent. At different times between 1727 and 1738, both inclusive, the Bank received from the public, on account of permanent debt, 3,275,0271, 17s. 10d., and advanced to it on account of ditto, 3,000,000. difference Debt due by the public in 1738 Under this act the Bank advanced 1,600,000. without interest, which In 1745, under authority of 19 Geo. 2. c. 6., the Bank delivered up to be cancelled 986,000l. of Exchequer bilis, in consideration of an annuity of 39,1727., being at the rate of 3 per cent. In 1749, the 23 Geo. 2. c. 6. reduced the interest on the 4 per cent. Charter continued by 4 Geo. 3. c. 25. till 12 months' notice after 1st of Under this act the Bank paid into the Exchequer 110,000l. free of all Charter continued by 21 Geo. 3. c. 60. till 12 months' notice after 1st of Under this act the Bank advanced 3,000,000l. for the public service Charter continued by 40 Geo. 3. c. 28. till 12 months' notice after 1st of Under this act the Bank advanced to government 3,000,000. for 6 In 1816, the Bank, under authority of the act 56 Geo. 3. c. 96., ad. vanced at 3 per cent., to be repaid on or before 1st of August, 1833 Charter continued by 3 & 4 Will. 4. c. 98. till 12 months' notice after 1st of August, 1855, with a proviso that it may be dissolved on 12 months' notice after 1st of August, 1845, on payment, &c. This act directs that in future the Bank shall deduct 120,000l. a year from their charge on account of the management of the public debt, and that a fourth part of the debt due by the public to the Bank, or 3,671,7004., be paid off Permanent advance by the Bank to the public, bearing interest This act, an abstract of which is given in a subsequent part of this article, exempts the notes of the bank from all charge on account of stamp-duty, and directs that in future the bank shall deduct 180,0001. a year from the charge on account of the management of the public debt. It also separates the banking from the issuing department of the establishment, and effects other important changes. 1,200,000 0 0 2,175,027 17 10 2,000,000 0 0 4,000,000 0 0 9,375,027 17 10 275,027 17 10 9,100,000 0 0 1,600,000 0 0 986,800 0 0 3,000,000 00 14,686,800 0 0 3,671,700 0 0 11,015,100 00 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 arrangements made at different times, the exclusive privileges of the Bank have been continued by successive renewals, till a year's notice after the 1st of August, 1855. (See table opposite.) (For further details as to this subject, see the Appendix No. 1. of the Report of 1832 on the Renewal of the Bank Charter, and the Acts of Parliament referred to in it; see also Postlethwait's History of the Revenue, pp. 301-310.; and Fairman on the Funds, 7th ed. pp. 85-88, &c.) The capital of the Bank on which dividends are paid has never exactly coincided with, though till of late it seldom differed very materially from, the permanent advance by the Bank to the public. We have already seen that it amounted, in 1708, to 4,402,343Z. Between that year and 1727 it was increased to near 9,000,000l. In 1746, it amounted to 10,780,000l. From this period it underwent no change till 1782, when it was increased 8 per cent., or to 11,642,4007. It continued stationary at this sum down to 1816, when it was raised to 14,553,000l. by an addition of 25 per cent. from the profits of the Bank, under the provisions of the act 56 Geo. 3. c. 96. The act for the renewal of the charter, in 1833, the 3 & 4 Will. 4. c. 98., directed that the sum of 3,671,700% of the debt due to the bank should be repaid by the public, giving the directors power, if they thought fit, to deduct it from the bank capital. But this was not done; the sum being reinvested in a government annuity, terminable in 1860. 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 receive Bank notes in payment of any sum that might be due to them, and pledging themselves to use their utmost endeavours to make all their 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 consequences might have proved fatal. Luckily, however, they delayed their attack till time had been afforded for providing a force sufficient to insure its safety. Since that period a considerable military force is nightly placed in the interior of the Bank, as a protection in any emergency 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 a third part of these establishments were forced to stop payments. This led to a considerable demand for coin from the Bank. In 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 engagedto loans to the Emperor of Germany. to bills drawn on 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. the latter end of 1796 and 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 panic became general, and extended itself to London. Demands for cash poured in upon the Bank from all quarters; and on Saturday, the 25th of 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, merchants, 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 apprehensions that the restriction had excited, Parliament being sitting at the time, a committee was immediately appointed to examine into the affairs of the Bank; and their report put to rest whatever doubts might have been entertained with respect to the solvency of the establishment, by showing that at the moment when the order in council appeared the Bank was pos sessed of property to the amount of 15,513,690l., after all claims upon her 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 expediency seems abundantly obvious. The run did not originate in any over-issue of Bank paper; but grew entirely out of political causes. So long as the alarms of invasion continued, it was clear that no Bank paper immediately 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 payment; 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 passing of the Restriction Act, that Bank notes would not circulate unless they were immediately convertible into cash; but the event showed, 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, by 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 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 extraordinary fall having attracted the attention of the legislature, the House of Commons appointed a committee to inquire into the circumstances by which it had been occasioned. 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 paper, and recommended that the Bank should be obliged to resume cash payments within two years. This recommendation 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 900 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 deficient 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 productive, 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 ruined a considerable number of farmers, and produced a general want of confidence, such a destruction of provincial paper took place as has rarely been paralleled. In 1814, 1815, and 1816, no fewer than 240 country banks stopped payment; and eighty-nine commissions of bankruptcy were issued against these establishments, being at the rate of one commission against every ten 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, by extending the field for the circulation of Bank of England paper, raised its value in 1817 nearly to a par with gold. The return to cash payments being thus facilitated, it was fixed, in 1819, by the act 59 Geo. 3. c. 78., commonly called Sir Robert 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 measures 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 accumulated at the Bank, the directors preferred recommencing specie payments on the 1st of May, 1821.-(See Table I. for an account of the price of bullion, the depreciation 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 Sir Robert 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 also a very 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 terraination 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 burdens laid on the industrious classes, has been most injurious to their interests. It will, however, be found in this, as in most cases of the sort, that the statements of both parties are exaggerated; and that if, on the one hand, the measure has not been so advantageous as its eulogists represent, neither, on the other, has it been nearly so injurious as its enemies would have us believe. In discussing this question, it is material to observe that the value of paper, which had been in 1815 and 1816 about 163 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 24 per cent of the value of gold; and that in 1819 the depreciation only amounted to 4 per cent.-(See Table I.) 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 considerable 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 4 per cent. to the value of the currency mistake altogether the effect of the measure. It is admitted, 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 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 consequently to that of the currency. It is very difficult, or rather, perhaps, impossible, to determine the precise degree of credit that should be attached to this statement; but, while we incline to think that it is well founded to a certain 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 purchases. 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 failing 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. And notwithstanding the falling off in the productiveness of the American mines still continues, the diminution thence arising has been since more than compensated by the extraordinary increase that has taken place of late years in the produce of the Russian mines and washings. 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 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 production, as by changes in the quantity of money afloat. Now, there is not one of the great articles of commerce the cost of which has not been considerably reduced, or which has not been supplied from new and more productive 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 has been wholly owing to the astonishing improvements made in agriculture, and to the increase of imports from Ireland. The fall in the price of wool is satisfactorily accounted for by the introduction and rapid multiplication of Merino sheep in Germany, where they seem to succeed even better than in Spain: and by the large and rapidly growing imports from Australia, where little more than 50 years ago there was not a single sheep! 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, Java, Louisiana, &c. Although, therefore, we do not deny that the falling off in the supply of bullion from the mines must, at first, have had some influence over prices, we hold it to be the greatest imaginable error to ascribe to it the entire fall that took place after the peace. Were its effect rated at from 5 to 10 per cent., we believe it would be very considerably overstated. (See art. PRECIOUS METALS.) On the whole, therefore, we are disposed to approve of the conduct of those who framed the act of 1819. That it added somewhat 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 been so in anything like the degree which its enemies represent. The period, too, when it was passed is now so distant, that the existing engagements amongst 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 standard had been really abandoned for the previous 18 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 having surmounted all the difficulties attendant upon the restoration of the old standard, and maintained it since 1821, 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 underhand and 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 the autumn of 1824; and the exchanges having been depressed, a drain for gold began to operate upon the Bank of England. But the directors of the Bank having entered, in the early part of that year, into an engagement with government to pay off such holders of 4 per cent. stock as might dissent from its conversion into a 3 per cent. stock, they were obliged to advance a considerable sum on this account after the depression of the exchange. This tended to counteract the effect of the drain on the Bank for gold; and, in consequence, the London currency was not very materially diminished till September, 1825. When, however, the continued demand of the public on the Bank for gold had rendered money scarce in the metropolis, the pressure speedily extended to the country. Such of the provincial banks—and they were a numerous class as had been originally established without sufficient capital, or had conducted their business upon erroneous principles, began to give way the moment they experienced an increased difficulty of obtaining pecuniary accommodations 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 6 weeks, above 70 banking establishments were destroyed, notwithstanding the very large advances made to them by the Bank of England; and the run upon the Bank for cash to supply the exigencies 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 17. and 27. notes. To guard against a recurrence of the wide-spread mischief and ruin produced by this and the previous 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 6 only. And it was accordingly enacted, that thenceforth any number of partners might form themselves into associations to carry on the business of banking, including the issue of notes, any where not within sixty-five 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 these have since been established in Gloucester, Manchester, Birmingham, Leeds, Liverpool, Bristol, Exeter, Newcastle-upon-Tyne, Hull, Nor wich, &c. The branch banks have been highly useful, but the benefits which it was supposed would result from the formation of joint-stock banks have not been so great was anticipated. (See post, BANKS (ENGLISH PROVINCIAL).) At best, the as |