540 THE ECONOMIC JOURNAL from its legitimate purpose; or, finally, it might be exported from the country to the impoverishment of the realm and to the advantage of our enemies But in spite of opposition the conveniences of the new system
more than counterva?led its alleged drawbacks, and the foundations of modern banking were laid on a basis that endured for some two centuries. The private bankers held the field; they gave no security for the sums deposited with them; they furnished no statement as to the soundness of their financial position, and they trusted to their personal character for a continuance of the confidence of their customers, pledging their entire private fortunes in case of need for the liquidation of their debts They did not long enjoy an undisturbed monopoly. In 1694 the Bank of England was established with a capital stock of 1,200,000, with general powers to carry on banking business, and to issue bills pay- able on demand, i.e. bank-notes. The Bank of England was vigorously opposed by the private bankers, who recognized in it a formidable competitor, and who, in the words of Macaulay, greeted its establish- ment with a howl of rage. But it had at least this in common with its opponents, that the original charter does not make any prescription as to the rendering of accounts, nor is anything said as to the liability, if any, of the stock-holders in the event of failure. In the early days of the Bank of England this question might very conceivably have been put to the test: it is still only by inference that the non- liability of the stock-holders is assumed, but it is less likely that the point will be settled in a court of law as a consequence of the failure of the Bank. It was nearly a century and a half before any other competitor with the private bankers came into the field; the Bank of England, clinging to its valued privilege of issuing bills payable on demand, .continued to hold this monopoly as against any combination of persons exceeding six in number. It was not until 1834 that the issuing of bank-notes was recognized not to be of the essence of banking, and the ?stablishment of the London and Westminster Bank laid the foundations of joint stock banking. This created again a new order of things; the Joint Stock Banks were recognized as rivals both of the private banks and of the Bank of England. The former held aloof from the intruders as much as possible, and marked their jealousy, under guise of mistrust, by excluding them till 1854 from the advantages of the Clearing-house. The latter clung tight to its privileges of bank-note issue, and drew round itself the magic circle of a sixty-five miles radius, within which no one henceforth should have the right to issue notes. But the public, for whose advantage, no less than for the profit of the banks, these various systems were maintained, had now their choice; they were free to intrust their cash either to a banker whose character they knew, whose integrity they trusted, and of whose financial position they thought they were assured; or they could have dealings with a manager comparatively unknown to them, behind
