B98 Jones—Relation of Economic Crises to Legislation. 
ment could release. In return for this the Issue Department 
paid to the Banking Department an amount of bank notes equal 
to the entire deposit of securities, coin, and bullion made in it. 1 
Although a decrease was allowed, no increase of issue above the 
amount so transferred was to be made, except in exchange for 
gold bullion at the ratio of £3 17s 9d the ounce. The only way 
n which gold could be removed, was in exchange for notes. 
These regulations bound the Issue Department strictly in its 
dealings with the Banking Department. A single exception 
which permitted of an increase of issue was in case a country 
bank should retire its notes. Upon permission of the govern¬ 
ment, the Bank of England might then increase its issues upon 
security by a sum equal to two-thirds of the country notes with¬ 
drawn. The remaining sections of the act restrict the note 
emission of country banks in numerous ways. The general 
tendency shows a desire to consolidate the issue of notes as 
largely as possible in the hands of the Bank of England as re¬ 
constituted and restricted. 2 
Under this system of organization the Bank of England is to¬ 
day working, but its introduction brought about a distinct rev¬ 
olution in the methods of that institution. 
While the conditions of note issue were most rigidly de¬ 
termined, the banking department was seriously weakened and 
practically left to its own resources and devices. 3 The reason 
for this may be found in the motives which brought about the 
law. 
The purpose for which the Peel Bank Act was conceived was 
Entire transfer to Issue Department £28,351,295, of which £14,000,000 
was in securities, £12,656,200 in gold coin and bullion, £1,695,095 in silver 
bullion, which was never to exceed one-fourth part of the gold coin and 
bullion held. The Banking Department received £8,175,025 in notes, 
£20,176,070 being in circulation. It retained £857,765, beginning busi¬ 
ness therefore with £9,032,790. 
2 The provisions of the act may be found in H. V. Poor’s “ Money and 
its Laws,” 2nd ed., pp. 297-298; also in “ The English Manual of Bank* 
ing,” by Arthur Crump, 4th ed., London, 1879, pp. 286-289. 
3 Lords’ Report of 1848, p. 48, Schaffle in “Deutsche Vierteljahrs- 
schrift,” 1858, heft I, p. 358. As Sir John Lubbock said, this 
legislation might rather be called the “Bank Note Act” than the 
“ Bank Act.” “ Essay on the Bank Act of 1844.” Addresses, p. 26. 
