BANK; BANKER; BANKING. 



BANK; BANKER; HAN KIM;. 



of the circulation previously authorised to be Uined by lucb country 

 bantu. This provision has railed the total secured iarae of the Bank 

 from 14.iXMi.tXNV. to 14.475.000t. Under the system established by the 

 Act of 1844, for every note which the imiue department may at any 

 time isue over and above the laitrinenUoned atun (issued on security), 

 an equal amount of coin or bullion must be paid into iU coffers. 

 Probably, however, in framing the measure, the operation of deposits 

 and the queetion of the renrre were not sufficiently considered either 

 by thon who were for or against the alteration. The pressure of 

 1847 was, it ha* been said, caused by the conduct of the directors in 

 making immoderate engagements and neglecting to provide an adequate 

 reserve for their own protection. " I do not deny " (said Sir H. Peel in 

 1847, Hansard's Debates, 95, coL 656) ' that one of the objects con- 

 templated by the measure of 1844 was the prevention of the convulsions 

 that had heretofore occurred in consequence of the neglect of the 

 Bank of England to take early precautions against the withdrawal 

 of iu treasure. " But he owned, at the same time, that there was no 

 imperative obligation on the directors to take these precautions, and 

 he admitted that the Act had failed in effecting this first object. The 

 other two objects, of maintaining and guaranteeing the convertibility 

 into gold of the paper currency, and the prevention of the difficulties 

 which arise at all times from undue speculation, being aggravated by 

 the abuse of paper credit in the form of promissory notes, according to 

 the provisions of the Act for limiting the issue of notes by the private 

 bankers, which we shall treat of in full under the head of Private 

 Batten, both these objects, he affirmed, had been secured. But it 

 is certain that the Bank is placed in a very peculiar position by the 

 operation of the Act We cannot, perhaps, as the Act has been 

 administered on two occasions, which strongly tested its efficacy, any 

 longer be in danger of such a peril as was imminent in 1825, when, as 

 Mr. HuskisDon said, the country was within twenty-four hours of a 

 state of barter ; and when, as Lord John Russell assures us, it is 

 certain that the Bank had prepared a notice that ita payments were to 

 be suspended for a time' 1 (Hansard's Debates, 95, col. 631) ; but still 

 the responsibilities of the Bank are materially increased. It is utterly 

 impossible that an establishment possessed of go large a capital should 

 not exercise a most powerful influence, either for good or for evil, on 

 the commercial interests of the country, and it is therefore a matter of 

 vital importance that the management of the Bank of England should 

 be conducted soundly and wisely. " If by our legislation we had pro- 

 vided that the Bank should at all times consider the interests of the 

 public and not of their proprietors ; if, on the other hand, the public 

 were generally agreed that the Bank should look to its own interests 

 only, and that on occasions of distress no man need go to the Bank for 

 any other accommodation than he would have as a customer in 

 ordinary times : in either of these cases their duty would be simple 

 and the problem easy to solve. But acting at one time as proprietors, 

 employing the money in their hands to objects of mercantile profit, 

 and then being suddenly called upon to consider the great interest of 

 the state, their position is difficult and perplexing beyond what can be 

 easily explained." (Id. cols. 635, 636.) 



Having now brought down to the present time our account of the 

 principal events in the history of the Bank, with the view of dwelling 

 chiefly on those points which seemed the best qualified to afford useful 

 information to the reader, we proceed to state what is the internal 

 constitution of the Bank. 



By the original charter, the management and government of the 

 corporation is committed to a governor, deputy governor, and twenty- 

 four directors. The directors are elected, on the 1st of May in each 

 year, by the proprietors of Bank stock, who vote in proportion to the 

 quantity of Bank stock which they hold, provided that no proprietor 

 shall have a vote who holds less than 6007. Bank stock, and no proprietor 

 shall give more than four votes. The governor is to hold 400W. of 

 took, the deputy governor 800<V., and each director 200W., during 

 office. In practice, no director holds more than the above amount ; 

 and the governor and deputy governor, when their year of office is 

 ended, immediately reduce their several amounts of stock to the sum 

 which qualifies a director. The directors are elected from such of the 

 proprietors as are merchants of the city ; a banker is seldom or never 

 admitted to a seat in the direction. It is believed that no director has 

 ever been allowed to derive advantage, by special accommodation or 

 otherwise, in his private concerns, from his position as director. In 

 the panic of 1857, not a shilling was advanced to any one of the 

 directors. The directors, it is to be observed, though by law elected 

 by the proprietors, are not appointed in virtue of anything in the 

 nature of a popular election or nomination of the proprietors. In 

 practice, a selection is made by what is called " The House List," which 

 contains the names of the persona whom the existing Board of Directors 

 em proper to be appointed, and this list is always adopted by the 

 proprietors at the annual meeting on the 1st of May ; eight directors 

 going out of office each year. But this arrangement has not been 

 found to be quite convenient for the general interests of the institution, 

 and a majority of the Board of Directors lately came to a resolution 

 which was communicated to the government of the day, suggesting 

 that one-sixth instead of one-third should go out annually. Thirteen 

 directors (of whom the governor or deputy governor are always to be 

 re a quorum, to conntitute a Board of Director*. Four general 

 court* are to be held in every year, in the months of April, July, 



September, and December ; and special general court* may be sum- 

 moned at all titties, upon the requisition of nine qualified proprietors. 



The total number of proprietors is between 5000 and 6000. There 

 are half-yearly meetings of the proprietors held for the declari' 

 dividends on the capital stock of the company, which are fixed by the 

 directors. 



The chief cashier is the banker ; under whose superintendence take* 

 place the business of receiving and paying money : be or his deputy 

 are bound to reside on the Bank premises. 



The accountant-general of the Bank superintends the account* of the 

 public creditor*, and all the business connected with the management 

 of the National Debt 



The diritltnil* on Bank stock from the establishment of the company 

 down to the present time have been as follows : 



! r I.t. 



177 

 17S1 

 1788 

 1807 

 1829 

 1839 

 1851 

 1853 

 1856 

 1857 

 1858 , 



5 1 per cent. 

 .. 

 ' ,. 

 JO .. 



84 

 10 



11 



The Bank is bound to give gold for its notes, both in Threadneedle- 

 street and at ita branches, to any one who requires it ; but it besides 

 takes upon itself the function of facilitating the supply of the silver 

 coinage to the public, that supply being chiefly derived from the Bank 

 of England through the provincial and London bankers. The Bank 

 also performs the same duty when required with respect to the copper 

 coinage. 



The Bank acts as the agent of the government in the management 

 of the National Debt. It receives and registers transfers of Stock from 

 one creditor of the public to another, and makes the quarterly pay- 

 ments of dividends on the debt. 



The balances of money belonging to the state are kept by the Bank, 

 which receives all payments on account of the revenue made )>y the 

 receivers-general to the'credit of the government, and makes payments 

 for the government in the same way that a private banker acts for a 

 customer. 



The Bank of England never re-issues any of its notes. The cost of 

 the note circulation is about 160,0002 ; though the expense is much 

 augmented by the above practice, what is lost in economy is considered 

 to be more than compensated by the advantages. The Bank is enabled 

 by this practice to make all its issues of notes to bankers and other large 

 customers in consecutive numbers; which gives great facility and 

 saves the Bank much time in recording the notes issued, which is 

 always done ; it also saves the bankers much time in enabling them to 

 record the numbers of the notes which they issue to their customers, 

 and facilitates the detection of forgeries. The notes, when returned, 

 are immediately cancelled, and in this way about 29,000 or 30,000 

 notes are destroyed doily. 



IV. The Art of Banking, at carried on by private ettaUi&menti and 

 joint-stuck aaoeiationt in London, in other part* of En</Utnd, and tit 

 Ireland, The Italian merchants who, under the name of Lombards, 

 -tt lei! in England during the 13th century, and previously to that 

 time the Jews, performed the greatest part of the money business of 

 the country. They were not, however, bankers, in the modern 

 acceptation of the word, and in fact the business of banking does not 

 appear to have been carried on among us earlier than the middle of 

 the 17th century. The goldsmiths of London, who before that time 

 had restricted their trade in money to the purchase and sale of foreign 

 coin, then extended their business by borrowing and lending money. 

 The latter part of their business that of lending was principally 

 transacted with the king, to whom they made advances on the security 

 of the taxes. They allowed interest to the individuals from I 

 t hey borrowed, and the receipts which they gave for deposits passed 

 from hand to hand in the same manner as Bank notes have since 

 circulated. 



The taking of interest for the use of money was not rendered legal 

 in England until 1546, when the rate that could be demanded was 

 fixed at 10 per cent. In 1624 the legal rate was reduced to 8 per cent., 

 and a further reduction to 6 per cent took place iu 1651. At this 

 rate it still remains in Ireland, but was lowered in England to 5 per 

 cent, in 1714, at which it now continues. These limitations have 

 always been productive of evil. Money-lenders by profession will 

 always be ready to take advantage of the necessities of borrowers, and 

 being left without competitors among the more conscientious capitalists, 

 demand not only a monopoly price for the use of their money, Imt 

 also a further sum proportioned to the risk and penalties attending 

 discovery. The Lombard merchants were accustomed to demand 

 20 per cent interest, and even more, according to the urgency of the 

 borrower's wants. 



The merchants of London had been Used to deposit their money f< > 

 security at the Mint in the Tower of London, whence they drew it out 

 as occasion demanded ; but in the year 1640 King Charles I. took 



