persistently blame, Peel's Act, are equally in fault, for it had absolutely nothing whatever to do with the resumption of cash payments. Mr. Turner, a Director of the Bank, states-" With regard to the effect of Mr. Peel's bill on the Bank of England, I can state from having been in the direction during the last two years, that it has been altogether a dead letter. It has neither accelerated nor retarded the return to cash payments."

In fact, there is great injustice in attributing much either of the praise or of the blame of passing this Act through Parliament, to Peel. The legislature was solemnly pledged to return to cash payments while he was yet a school-boy in the junior forms of Harrow. There does not appear to have been any speaker fantastic enough to propose that the Bank should never return to cash payments. The Bank of its own accord commenced partially to resume cash payments in 1817, and would have succeeded in so doing, if it had not so perversely rejected the principles of the Bullion Report. And if it had not been owing to circumstances which disturbed its management in 1818, and which it was incompetent to deal with, cash payments would have been resumed while Peel was still in that unconverted state in which he voted against Horner's resolutions in 1811. So far was he from converting Parliament, that he was himself one of the latest converts, and the ministry conferred great honour upon him by allowing him, while yet so young, to take such a prominent part, and be the mouth-piece of the unanimous determination of the Legislature.

But if he is entitled to little of the praise, still less is he liable to the blame which has been heaped upon the Act by a number of fanatical writers from that day to this, who have most egregiously misrepresented the facts. It is often alleged and supposed that while the Bank Note was in a state of great depreciation, he, by some mysterious influence, induced the Legislature to pass an Act to compel the Bank to resume payments at once in full weighted coin. And to this imaginary circumstance all sorts of imaginary evils have been attributed. But such statements are absolutely false. The great restoration of the Bank Note to its par value very nearly took place in 1816, and was caused by the enormous destruction of the country bank paper. During the latter months of 1816, the price of gold was £3 18s. 6d., which shewed that the value of the Note was 19s. 10.2, a depreciation which was

almost imperceptible; and it was entirely owing to the mismanagement of the directors that the depreciation increased during 1818. In January, 1819, the price of gold was £4 38., and the value of the Note 18s. 9.5. However, Peel's Act did not even compel the Bank to redeem its notes in gold ingots at par. Up to October, 1820, they were to be redeemed at the rate of £4 1s. per ounce; or the value of the Note was 19s. 31; after that, till 1st May, 1821, the price of gold was to be £3 19s. 6d., or the value of the Note 19s. 7d.; and even after that, two years were to elapse before they were to be payable at par in coin. Peel's Act, therefore, expressly allowed the Bank Notes to be redeemed at the current depreciation of the day, provided they were demanded in certain quantities. But as it was perfectly within the power of the Bank to bring them to par if they chose to do so, the Act gave them abundant time to take the necessary measures to efface the slight depreciation they were then subject to. This cautious policy was, however, found to be quite unnecessary, and the Bank, by an Act of their own, resumed payment in coin at par in 1821, two years before they were obliged to do so by Law. Hence the allegation that Peel's Act compelled the Bank to pay off their depreciated Notes at par, which is so often made, is utterly untrue, and it is highly discreditable that it should be so often repeated, even in these days.

15. At length, in 1827, the light penetrated the Bank parlour. The principles of the Bullion Report were acknowledged to be true, and professedly adopted by the Bank. Mr. Ward stated in 1832 that there was not a single person in the Bank who did not admit that its issues should be regulated by the foreign exchanges and the bullion market. In 1819 the Directors had forwarded a resolution to the House of Commons denying that the exchanges were to be regarded in regulating the issues. He himself, from being connected with the exchanges, had many opportunities of observing its practical truth. The Bank Directors, however, were not convinced of it, because they found in practice that the exchanges did not follow the issues of the Bank. But the truth was they neglected to consider the issues of the country banks; and it was only in 1819 that they obtained a correct account of the country issues: when that was got, it was found that, taking the Bank and the country issues together, the

principle was quite correct. The observation of these facts had gradually convinced the Directors; and in 1827 the resolution of the Directors in 1819 was solemnly expunged from their books.

16. The truth of the principles of the Bullion Report being acknowledged, Mr. Horsley Palmer, the Governor of the Bank, explained to a Committee of the House of Commons how the Bank endeavoured to carry them into effect. He said that in a period of full Currency, and, consequently, with a par of exchange, the Bank considered it desirable to invest two-thirds of its liabilities of all sorts in interest bearing securities, and one-third in bullion. The circulation of the country being then regulated by the action of the foreign exchanges, the Bank was extremely desirous to avoid using any active power of regulating the circulation, but to leave that entirely in the hands of the public. The action of the public was fully sufficient to rectify the exchanges without any forced action on the part of the Bank in buying or selling securities. He thought it desirable to keep the securities very nearly at the same amount, because then the public could always act for themselves in returning notes for bullion for exportation when the exchanges were unfavourable: and if there was a great influx of gold, the Bank could always re-assume its proportion by transferring part of the bullion into securities. He considered that the discount of private paper was one of the worst means which the Bank could adopt for regulating its notes, as it tended to produce a very prejudicial extension of their issues.

17. In the debate on renewing the Bank Charter in 1833, Peel gave it as his opinion that there should be but one bank of issue in the metropolis, in order that it might be enabled to exercise an undivided control over the issue of paper, and give facilities to commerce in times of difficulty and alarm, which it could not give with the same effect if it were subject to the rivalry of another establishment. He believed that the effect of the Usury Laws in restricting liberal accommodation in time of commercial panic was most injurious. He resisted at great length the proposal to make Bank of England notes legal tender between private persons, as a departure from the principle of the Act of

1819, and from the true principles which should govern a paper currency. The plan of making Bank Notes legal tender gave rise to a long debate, but was ultimately carried by 214 to 156.

Colonel Torrens strongly condemned the principle above given, which Mr. Palmer said was adopted by the Bank to regulate their issues. He said that the present Directors freely acknowledged that their predecessors in 1796, 1812, and 1819, were ignorant of the elementary principles of money and currency, and caused by their mismanagement ruinous fluctuations in the value of property.

18. Peel strongly opposed the creation of another bank of issue in the metropolis, as it might interfere with the power of the Bank of England to give accommodation to commerce in times of panic. But at this time there was nothing to prevent private bankers issuing bank notes in London. Up till 1772 all private bankers in London had done so; but they discontinued issuing notes after the panic of that year: but there was no law to prevent them doing so till the Bank Charter Act of 1844.

But at this time a new kind of banks was founded in London, which there can be no reason to doubt will ultimately change the whole system of banking.

When the Bank of England was founded it received no monopoly in its favour; and it was only in 1697, after the disastrous failure of the Land Bank Scheme, and the ruin of public credit, that the Bank was enabled to obtain a monopoly. But even that did not affect the common law right to establish such institutions; it only said that no rival bank should be erected or maintained by Parliament. None, however, were formed: but in 1708, another company began doing banking business by issuing notes. The Bank then, in 1709, obtained a clause in the Act of that year, prohibiting any company of persons exceeding six in number from "borrowing, OWING, or taking up money on their bills or notes, payable to bearer on demand," which was the meaning attributed to the word banking at that time. And it was supposed that to prohibit persons from owing money, on bills, or notes payable to bearer on demand, was an effectual bar to their undertaking the business of banking. And this clause was effectual for a considerable time. But about 1740,

some persons devised schemes for evading these words. In consequence of this, the Bank, on the renewal of their Charter in 1742, obtained a prohibition of banking companies being formed in much more explicit terms. A clause in the Act, Statute 1742, c. 13, § 5, says " And to prevent any doubts that may arise concerning the privilege or power given by former Acts of Parliament to the said Governor and Company of exclusive banking, and also in regard to erecting any other Bank or Banks by Parliament, or restraining other persons from banking during the continuance of the said privilege granted to the Governor and Company of the Bank of England, as before recited, it is hereby further enacted and declared, by the authority aforesaid, that it is the true intent and meaning of the Act that no other Bank shall be erected, established, or allowed by Parliament, and that it shall not be lawful for any body, politic or corporate, whatsoever erected, or to be erected, or for any other persons whatsoever united, or to be united, in covenants or partnership, exceeding the number of six persons, in that part of Great Britain called England, to borrow, OWE, or take up any sum or sums of money on their bills or notes payable at demand, or at any less time than six months from the borrowing thereof, during the continuance of such said. privilege to the said Governor and Company, who are hereby declared to be and remain a corporation with the privilege of exclusive banking, as before recited."

These words were devised with the utmost care, so as to prevent any other rival, in the most comprehensive manner possible. It was supposed that no legal ingenuity could devise an expedient to evade so extensive a prohibition. And for very many years it did have the effect of preventing any other joint stock bank in England being founded. But alas! for the wit of lawyers! At the time this clause was framed, all bankers, no doubt, issued notes. But we have seen that that is not the essence of banking. The essence of banking is to CREATE CREDIT; and no doubt all the early bankers, when payment of this credit was demanded of them, preferred to offer it in their own notes rather than in coin. But London bankers, after the experience of 1772, found it expedient to discontinue the issue of notes, and to confine themselves to cheques and payments in coin. And there was nothing in the words of the monopoly clauses of 1709 and 1742 to prevent a joint stock bank being formed to carry on business in the same