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BANKING 113 Ireland, possess the power of issuing notes. The lar^e to prevent panic, hence only a rate of 5 per cent, has been proportion of local branches in these countries has been generally charged, though in 1899 the rate was 7 per cent, greatly assisted by this power. for a short time. The proposal made by Mr Lowe (afterThe immediate effect of the division of the Bank of wards Lord Sherbrooke) in 1873 was to charge 12 per cent., England into the two departments—the issuing depart- a rate which presupposes panic. Hence the negotiations men an t d the banking department—is best shown came, to nothing. The Act of 1844 remains unaltered. b England. y .comparing the weekly statement of the I he issue on securities, allowed by it to the Bank of Engliabilities and assets of the Bank of England land, was originally £14,000,000. This has since been inof the 7th September 1844, the date when the first publica- creased under the provisions of the Act to £17,775,000 (3rd tion of accounts was made, according to the old and the March 1900). Hence the notes issued by the Bank have new form. The figures are as given on page 75. ess gold by £3,775,000 behind them than previously. On examining the statement according to the “old ause 3. of the Act of 1844 allowed silver to form part of form, it will be seen that the main difference between the specie to be held against the issue to an extent “ not the two sides of the account exceeding one-fourth part of the gold coin and bullion” Dr. £33,482,000 Cr. £37,046,000 held, and it will be observed that £1,694,087 in “silver is the rest 3,564,000 (omitted in the “ old,” incorporated in £37,046,000 the ‘ ‘ new form ”). >7!^ a°n WiaS 1844. This had ^ssue department—first return, 7thbeptember been increasedto£2,727 001 The “Proprietors’ Capital,” £14,553,000, and the the 3rd October 1846. After that date the amounts Government securities held against it, £14,554,834, are by declined till 20th August 1853, when the last entry disboth omitted in the “ old form,” but the principal effect appeared from the accounts of the bank. of the Act of 1844 is shown by the figures in the issue The Bank of England had no branches before 1826. department shown in the “ new form.” It will be observed it has now offices at Birmingham, Bristol, Hull, Leeds, that against £14,000,000 of the notes issued, securities Liverpool, Manchester, Newcastle, Plymouth, Portsmouth, were held, principally Government securities, but the remainder of the issue was made against bullion. £8,175,025 Western London (1 Burlington Gardens), Law Courts Branch (London, W.C.). Originally, besides the Bank of of the notes are returned as in the banking department, England, nearly all the provincial banks in England and which had accordingly that amount of specie at its Wales possessed the privilege of issue. By the Act of disposal, or rather of notes against which specie was held. 1844, the maximum circulation of the English issuing Hence, if through any circumstance the Bank of England banks was fixed at the average circulation of the twelve were called on for a larger sum in notes or specie than weeks before 27th April 1844. the notes in its “banking department,” now technically The numbers were fixed at spoken of as the “reserve,” amount to, permission has 207 Private banks with an authorized issue of . £5,153,417 to be obtained from the Government to “suspend the 72 Joint stock banks with an authorized issue of 3*478,230 Bank Act,” in order to allow the demand to be met whatever the amount of specie in its “issue department” £8,631,647 may be. Three times since the passing of the Bank Act— and the actual circulation of the country in October during, the crises of 1847, 1857, and 1866—authority has 611 for 1844 was as follows

™ g^ suspension. On one of these dates, in 1857, the powers, of the Act had to be exceeded; on the Noles^ in Circulation.—The monthly return of the circulation other two occasions, the fact that the permission had ending 12th October 1844 (Stamps and Taxes, 25th October). been given stayed the alarm. It should be remembered England. whenever the Act of 1844 is criticized, that since it came Private banks £4,674,162 Joint stock banks ... . . 3 331 516 into force there has been no anxiety as to payment in specie of the note circulation; but the division of the Scotland. specie held into two parts is an arrangement which is not Chartered, private and joint stock banks . 2,987,665 without disadvantages. It appears to increase the liability Ireland. Bank of Ireland. ..... 3,597,850 to constant fluctuations in the rate of discount which is Private and joint stock banks . . . 2,456,261 one main characteristic of the English money market. Between 1822 and 1844 a rise in the Bank rate above 4 Total . . £17,047,454 per cent, was rare; 5 per cent, was occasionally charged and 6 per cent, on 1st August 1839. Of late years the In January 1901 the number and amounts were rechanges, in the Bank rate have been constant, and the duced to :— in ordinai Authorized issue. Actual issue. i1899 QonUathe t10nS ’ eVGn y years, Thus 33 Private banks. rate was 4 per cent, on 9thvery May,severe. and 7 per centin £1,220,588 £344,760 27 Joint stock banks 1,541,735 on 19th December. From the day when the Act came 825,009 into operation in 1844 to the close of the year 1900 there . The issues have gradually diminished under the provihad been 400 changes in the rate. The other hopes which sions of the Act of 1844, designed, as mentioned before, to blr K le . el expressed in 1.844, such as that after the Act concentrate the note issue of England and Wales on the came into force commercial crises would cease, have not Bank of England. been realized. There has been frequent discussion among The yearly average of notes in circulation of the Bank cankers and occasionally with the Government as to the of England, of the banks of issue in England and Wales, advantage it might be to grant the Bank of England an and in Scotland and Ireland, and also bullion at the automatic power to augment the note issue on securities Bank of England was as follows :— when required—similar to that possessed by the Bank of England and Wales. . ™ny One of the hindrances to the success of Bank of Bullion in Private Joint Stock e an as England. Bank. Banks. Banks. P ^ been that hitherto the Government, acting 1844 £21,030,000 £15,567,000 £4,880,000 £3,483,000 nn e advice of the Treasury, has required an extremely igh rate of interest, of which it would reap the advantage, Scotland and Ireland. to be paid on the advanceg made un(Jer thege conditiong.’ Banks in Bank of i n . T • t, Banks Insh Scotland. e Ireland. Great Britain o ject of the arrangement of the Bank of Germany is and Ireland. 1844 £3,026,000 £3,523,000 £2,205,000 £38,147,000 S. IT. — 15