22 



THE FARMER'S MAGAZINE. 



I can only add, that 1 have been studious, as far as I 

 am enabled, to state from my practice and experience 

 what I consider tlie best mode of entering upon and 

 quitting a farm. I have no private theory to carry out 

 beyond that of benefiting a class from which I have re- 



ceived the utmost consideration and respect, and which 

 it will ever be my desire to retain. 



Some short discussion followed, on the subject of the 

 lecture ; and the proceedings terminated with a vote of 

 thanks to Mr. Baker. 



THE BANK CHARTER— ITS OBJECT AND EFFECT. 



As many of our country readers may not bo ac- 

 quainted with the matters rolatinoj to the currency, 

 and are consequently at a loss to understand the causes 

 of the financial crisis under which the country is now 

 passing, and which has so powerfully affected the 

 grain as well as all other produce markets of the king- 

 dcm, the following explanation of the Bank of Engliind 

 Charter, and its efTects upon the commerce of the 

 country, may not be unacceptable. 



By an act of parliament passed in 1819, at which 

 time the Bank Charter was renewed, provision was 

 made for a return to cash payments. In explanation 

 of this we must state that in the year 1797 a crisis of 

 a similar nature to that now existing took place, under 

 the pressure of which the Bank of England tvas com- 

 pelled to suspend its payments. Upon which, Mr. 

 Pitt, who was then Chancellor of (he Exchequer, issued 

 an order in Council authorizing the Bank to refuse 

 giving cash for their notes; and an act of parliament 

 was subsequently passed declaring the one pound note 

 and a shilling equal in value to a guinea in gold, and 

 making bank notes a legal tender, inflicting a penalty 

 upon any one refusing to accept them in payment for 

 goods or otherwise. 



This act continued in force until the year 1819, 

 when, upon the question of a renewal of the Bank 

 Charter being brought forward, the Restriction Act, as 

 it was called, was repealed, and the Bank of England 

 from the time the act came into operation was nomi- 

 nally obliged, like any other bank, to pay its notes in 

 cash when required to do so by the holders. No re- 

 striction, however, was laid upon the Bank by this mea- 

 sure as to the amount of notes to be issued by it; that 

 question being left entirely at the discretion of the 

 directors, to manage it according to the supposed 

 requirements of the commerce of the country. 



In 1844 Sir Robert Pee] found himself at the head 

 of the Government, and the question of the renewal of 

 the Charter of the Bank of England being again agi- 

 tated in Parliament, he brought forward and carried a 

 bill, by which material alterations were made in the 

 management of the Bank, the principal of which were 

 as follows : 



First. That the two departments of the Bank, namely 

 the bank of issue, and the bank of deposit, or common 

 banking business, should in future be kept entirelv 

 separate, so that the funds of one should not be avail- 

 able to, or be interfered with, by the other. 

 ^ Secondly, That the issue of notes should be restricted 

 in amount to the value of the gold held by and the se- 

 curities deposited with that establishment. It is here 

 proper to state that, by an arrangement of long stand- 

 ing, the capital of the Bank was taken on loan by the 

 Government, for which securities are held: the Bank 

 being allowed to issue notes to the amount. 

 _ ^hirdly. The Bank was required to give a weekly 

 instead of a quarterly account or statement of its lia- 

 bilities and assets, to be made up every Saturday night, 

 and published in the Gazette the following week the 

 two departments of issue and deposit bein^ kcnt sena! 

 rate iu the statement. ^ ^ ^^^^ 



These, so far as the Bank of England was concerned 

 are the most important arrangements provided for by 

 the act of parliament of 1844-5. The two first, how- 

 ever, are those which were likely the most seriously to 

 affect the commercial interests, according to the opi- 

 nions of some of the most eminent financiers. Nor 

 were they wrong in their conjectures; for in 1847 

 such was the position of the Bank, superinduced by the 

 separation of the two departments, that the Govern- 

 ment were compelled to issue a letter of licence to the 

 Bank to set aside pro tempore the act of parliament, 

 and make a transfer of coin from the issuing depart- 

 ment to that of banking ; the specie held by this latter 

 on Oct. 25 being only £2,860,000, whilst the former 

 held £""5,570,000. Thus, whilst the one department of 

 the same establishment was on the eve of stopping 

 payment, the other was in possession of a sufficient 

 sum to afford it relief, but was restricted by the act of 

 parliament from doing so. 



Since that period the gold-fields of California and 

 Australia have unfolded their treasures, which have 

 nearly all passed through this country, by which the 

 Bank of England might have been supposed to be well 

 supplied with bullion. And such, in fact, was the case 

 for a time ; for we find that in July, 1852, the amount 

 of gold in the two departments was £22,040,000, being 

 nearly half the liabilities (£40,480,000). But since that 

 period, notwithstanding the enormous and unprece- 

 dented quantities of bullion continually since arriving 

 at our shores, the quantity held by the Bank has as 

 continually decreased, although to prevent it the 

 interest upon discounts has advanced from \% per cent, 

 in 1852 to 10 per cent, in 1857, at which latter period 

 (Nov. 11th inst.) the Bank Account for the week stood 

 as follows : 



GENERAL ACCOUNT. 



Liabilities. 

 Bank Stock . £14,553,000 



Rest 3,364,-356 



Notes in Cir- 



culation . . 



Public De- 

 posits .... 



Private do. . . 



7 Day Bills . 



20,188,355 



5,314,659 



12,935,344 



853,075 



£57,203,789 



Assets. 

 Government 



Securities. £14,475,600 



Do, do 9,444,828 



Other ditto . 26,113,453 

 Bullion and 



Specie .. 7,170,508 



£57,203,789 



And the accounts of the separate departments were as 

 follows : 



Dr. Issue Department. Cr. 



Circulation .£20,183,355 | Bullion, &c.. £6,666,065 



Dr. Banking Department. Cr. 



Liabilities . . £37,020,434 | Specie £504,443 



Thus, by the prohibition of the act of parliament, or 

 the Bank Charter, the banking department was reduced 

 to such a dilemma as not to have more bullion and 

 specie than would have paid three pence in the pound 

 had it been required to meet all its liabilities ; whilst 

 its colleague, the issue department, was in possession of 



