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shillings. The first enactment we find concerning them is in the year 1775, when an act was passed to prevent the issue of notes for sums under twenty shillings *, which were altogether prohibited; and notes for sums under 5l. were put under such regulations, two years afterwards, as made it impossible for bankers to issue them.

The consequence of this exclusive privilege has been, that, with some few exceptionst, bank

+ 17 G. 3. c. 30. # The chief exceptions are in the county of Lancaster, but they have arisen from this very exclusive privilege. It being impossible that any six persons could be found equal to the money transactions of that large manufacturing and commercial county, a peculiar currency has been resorted to. All manufacturers in that county having correspondents in London to whom they send goods for the purpose of being sold, or direct remittances to be made for goods sold elsewhere, it suits them to draw upon London. This they generally do at short dates for sums of, or under, 501. Such bills of exchange form the main currency of Lancashire. Each drawer or payer endorsing his name, or the name of his firm upon them, as he uses them in making payments ; and before any such bill of exchange arrives in London for liquidation, the names of twenty or thirty indorsers appear on it, all of whom thas become sureties to each other and the public. Such bills of exchange are deposited with bankers, until they are required for making payments. Bankers in Lancashire are thus depositaries not of the money,

15 G. 3. c. 51.

but of the bills of exchange of others, which they issue upon the orders of their customers and at their risk; and if this exclusive privilege shall be continued, mercantile men in other places, and even, perhaps, in the city of London, may contrive a similar system for themselves.

ing companies in England do not follow the business of banking as a substantive trade, but for the purpose of carrying on some other trade, to which the business of banking is aiding and assisting

Banking companies in England have thus not only the risks of banking to encounter, but also the risks to which such other trade is exposed.

The Bank of England itself does not carry on the business of banking as a substantive concern. It is the factor as well as the banker of the state, and often advances money to this great customer to the prejudice of its other customers, and often to its own inconvenience, and sometimes even danger. It also deals largely in the purchase and sale of Exchequer bills, by which it expands or contracts its circulation at pleasure; and the contraction is always more sudden than the expansion, to the derangement of the general industry of the country, and the not unfrequent ruin of individuals,







Besides the consequences adverted to, this exclusive privilege is liable to the following objections :

1. The amount of currency in England perhaps does not exceed 60,000,000l., of which perhaps not so much as one third is in gold and silver ; but the sum of labour, and of the products of labour, put and kept in motion by these 60,000,000l. is perhaps notless than 600,000,000l.; a large portion of which (perhaps one half) is embodied in bills of exchange discounted by bankers; so that the security of transactions does not consist in a metallic currency, as is generally supposed, but in the solidity of banking establishments based upon a metallic standard, all of which are rendered insecure by this exclusive privilege of the Bank of England.

2. Of the paper currency of England perhaps not more than one half of it, or a third of the whole (paper and metallic), is in notes of the Bank of England. Its exclusive privilege, therefore, renders insecure the paper currency of bankers issuing notes to an equal, if not a greater amount. But it further operates a much more extensive mischief, in rendering insecure deposits made by individuals with bankers to an amount perhaps exceeding fifteen times the whole currency of England, both metallic and paper.

3. Of the amount of these deposits an estimate may be formed by what was proved (as satisfactorily as such a fact admits of proof, unless returns were to be required from every banker, namely, by an estimate formed by persons examined competent to make it,) to be the amount of deposits in Scotland in 1826 ; namely, that the sums deposited with bankers in Scotland exceeded 20,000,0001., while from returns actually made, it appeared, that the whole paper circulation of Scotland was then under 3,200,000l. ; which, with the silver coin circulating there, formed the whole currency of Scotland, and could not amount in all to 4,000,000l. If the sum of currency in England can be taken to afford

any rule for estimating the amount of deposits with bankers in England, or the relative wealth of the countries be assumed for this

purpose, deposits with bankers in England probably exceed 300,000,0001. They must, at all events, amount to a very large sum ; every part of which,




with the exception of deposits in the Bank, iš rendered insecure by this exclusive privilege.





From the situation in which the Bank of England is placed by this exclusive privilege, the Bank is enabled to put forth more of paper currency than the wants of the country require.

The manner in which the Bank puts forth its notes is chiefly by discounting bills of exchange, and purchasing Exchequer bills; but it not unfrequently also makes advances to Government to an inconvenient amount, and sometimes it

applies its means in a manner altogether inconsistent with the principles of banking.

Bankers in the country put forth their paper also by discounting bills of exchange. But whatever paper bankers in the country put forth in discount forthwith returns to them in the way of deposit from their customers. But not so in the case of the Bank of England. Its notes go

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