BANKING 111 translated into English by Mrs Knight; and although 19th century. Bankim Chandra’s friend and colleague, numerous works of fiction are now annually produced in Dina Bandhu Mitra, was virtually the founder of the every province in India, Bankim Chandra still holds the modern Bengali drama. Another friend of his, Hem first place. He gathered round him a number of literary Chandra Banerjea, was a poet of recognized merit and men who have left their impress on the literature of talent. And among the younger men who venerated Bengal. In his earlier years he served his apprentice- Bankim Chandra, and benefited by his example and ship in literature under Iswar Chandra Gupta, the chief advice, may be mentioned two distinguished poets, Nalein poet and satirist of Bengal during the earlier half of the Chandra Sen and Rabindra Nath Tagore. , (R. C. D.) BANKING. 1. History and Statistics.
private banks, some of considerable power. The purely city banks associated themselves at the “ Clearing House ” British Banks, as early as 1776. The Bank of England has never formed THE following article is confined generally to the state a member of this body, though it “ clears on one side,”— of affairs at the present time, and with respect to i.e., its claim on the clearing bankers is made through the the United Kingdom does not go back farther than to the clearing house, but the claims of the clearing bankers on date when Sir Robert Peel’s Bank Acts of 1844-45 were the Bank are forwarded direct to Threadneedle Street twice passed. These Acts have greatly influenced the present or thrice daily. Nor did the banks in Fleet Street or at position of banking in Great Britain and Ireland, and it is Charing Cross ever belong to it. In 1858 the clearing of necessary to begin with them, although to render the country cheques was added through the arrangements made history intelligible some references must be made to by Sir John Lubbock (afterwards Lord Avebury). The earlier events. The charter of the Bank of England was country clearing ” is a great assistance to business, as it dated 27th July 1694. Originally established to advance enables a cheque drawn on the most distant village in Engthe government a loan of £1,200,000, the management of land to be dealt with as conveniently as a cheque on London. the National Debt of the country has been confided to it The Bank of England, as stated before, was incorporated ever since its foundation, and it has always remained the by the Act of 1694. The position of the other banker of the Government. The interest on the stock in banks at that time was defined by the Act of Hlstorywhich the debt is inscribed has always been paid by the 1697, which declared that no bank, that is, no joint stock bank, originally half-yearly, now quarterly, and the bank, was to be established within England during the registration of all transfers of the stock itself is carried on continuance of the Bank of England,” and by the Act of by its officers. The bank also assumes the responsibility 1708, which provided that “during the continuance of the of the correctness of all the transfers. These circumstances Bank of England, no company or partnership exceeding and the monopoly granted to it from the date of its six persons, in England ” should “ borrow, owe, or take up foundation till 1826, of being the one joint stock bank in any sum or sums of money on their bills or notes, payable England and Wales and also of issuing notes which, since on demand, or at any less time than six months from the 1833, have been legal tender in England and Wales borrowing thereof.” This was confirmed by the Act of everywhere except at the Bank of England itself, combined 1800. No change of importance was made till the Act of with the. fact that besides being the banker of the Govern- 1826, which prohibited “bank notes under £5,” and the ment it is the banker of the other banks of the country, second Banking Act of that year. This act allowed the and for many years had the control of far larger deposits establishment of co-partnerships of more than six perthan any one of them individually, gave it early a sons, which necessarily were “Joint Stock Companies,” pre-eminence over all the other banks. This pre-eminence “beyond 65 miles from London.” The Act of 1833 it still maintains, though more than one competitor now allowed the establishment of joint stock banks within the holds larger deposits, and though, collectively, the 65-miles limit, and took away various restrictions of the deposits of the other banks of the country which have amounts of notes for less than £50. But the power of offices in London many times overpass its own. In one issuing notes was not allowed to joint stock banks within sense the power of the Bank of England is greater now the 65-miles radius. than ever. By the Act of 1844, regulating the noteAs during the whole of the period from 1694 to 1826 issue of the country, the Bank of England became the sole and 1833 no bank could be formed with more than six source from which legal tender notes can be obtained, a partners, the majority of the banks throughout England power important at all times, but pre-eminently so in and Wales, for more than a century, were necessarily small periods of pressure. The authority to supply the notes re- and usually isolated firms. Those in the country districts quired, when the issue needs to overpass the limits of the had frequently branches in the small market towns close Act of 1844, is given by the Government at the request of to them, those in London had never more than one office. the bank. Hence the Bank of England becomes the centre These banks were sometimes powerful, but absolute of interest at the times when a “Treasury letter” is secrecy was preserved as to the particulars of their required, and holds then a power, the force of which can business, the amount of capital employed in it and of hardly be estimated. In the early days of the busi- deposits held. This secrecy was preserved by many of ness in England, issuing notes formed, as Bagehot says the private banks as late as the year 1890. Messrs Glyn, in his Lombard Street, the introduction to the system of of Lombard Street, who assumed the joint stock form deposit banking—so much so, that a bank which had not the with unlimited liability in 1885, took the lead in the power of issuing notes could scarcely exist out of London, movement for publishing accounts. It was some time where traditional custom associated with the “ Goldsmiths,” before the practice became general. The restriction of who took deposits from the time of James I. onwards, had partners in private banks to six continued till 1862. By established “ deposit banking ” as early as the 17th century. an Act passed in that year they were allowed to be ten. The Bank of England possessed a practical, though This, however, did not extend to issuing banks, who were perhaps not an absolutely legal monopoly of issuing notes restricted to six as before. The power of increasing bank m London, and was gradually surrounded by a circle of partnerships to ten has been but little made use of.