The Peel Bank Act of 18^. 
397 
to soften, and if possible, prevent crises, still remains an ulti¬ 
mate aim. 1 John Stuart Mill said, in summing up the aims of 
the legislation in 1844, “I think myself justified in affirming 
that the mitigation of commercial convulsions is the real, and 
only serious, purpose of the act of 1844. ” 2 This object was 
clearly placed in the foreground by Sir Robert Peel in the 
speech in which he introduced his bill into the House of Com¬ 
mons. 3 > 
The act provided for a separation of the Bank of England 
into two distinct parts; one entitled the Issue Department, the 
other the Banking Department. The first of these alone was to 
have the power of issue. The creation of this Department of 
Issue necessitated some transfer of money and securities. It 
was conceived that there existed a certain minimum below 
which the circulation of bank notes would never go in England. 
This sum was judged, from experiments since 1840, at 
£14,000,000. 4 It was therefore allowable, according to the 
theory of the promoters of the act, for this amount of notes to 
be in circulation, without there being a corresponding sum of 
gold in the bank to insure redemption. 5 The Banking Depart¬ 
ment was required,' therefore, to transfer to the Issue Depart¬ 
ment securities to the amount of £14,000,000. Of this sum the 
larger part consisted of government bonds which comprised that 
part of the public debt advanced by the bank (£11,015,100). 
Additional sums were also to be transferred consisting of such 
gold coin and gold and silver bullion as the Banking Depart- 
1 Loyd “ On the Management of the Circulation,” p. 105 (Tooke, III, p. 
248), but also see “ Thoughts,” p. 8 (Tooke, IV, pp. 281-282). Cf. Opinion 
of the Chairman of Parliamentary Commission of Inquiry, contained in 
its report, 1848. 
2 «p r i n< 0 f Pol. Econ.,” Bk. Ill, ch. 24, §3. 
3 “ Some apprehended that the proposed restriction upon issue will 
diminish the power of the bank to act with energy at the period of 
monetary crises, and commercial alarm and derangement. But the ob¬ 
ject of the measure is to prevent (so far as legislation can prevent the 
recurrence of those evils from which we suffered in 1825,1836, and 1839. 
It is better to prevent the paroxysm than to excite it, and trust to des¬ 
perate remedies for the means of recovery.” Peel’s speech, May 20,1844. 
4 Increased to £15,000,000 in 1866. 
5 Cf. Wagner “ Lehre,” pp. 145-146. 
