BANK 275 the security of its notes." At the same time they announced their determination to con- tinue their usual discounts. The fact was, the order in council simply prohibited the bank from doing that which it was entirely out of the question for it to do. On Feb. 27, the same day on which the bank suspended specie payments, parliament approved the order in council. Notes of the denomination of 1 sterling were immediately prepared and issued, and all fractional parts of a pound were refused payment by the bank. This suspension, while it was absolutely necessary to prevent the ruin of the bank, was of equal importance to every business interest throughout the kingdom. The government, while it interposed for these im- portant ends, was equally interested in the wel- fare of the institution with which it was so inti- mately connected in all its financial concerns. It was then struggling through its tremendous efforts against the power of France and Napo- leon, and the bank was to it what the heart is to the animal organism, its circulating notes what the blood is to that organism the very source of vitality and power. Although every assur- ance was given that this measure was intended to be merely temporary, it was continued from time to time until May 1, 1823, when the re- sumption of specie payments took place, for which preparation had gradually been made within the previous four years. This was not, however, accomplished without widespread dis- aster, the details of which are painful to read even at this distant day. This was the case, too, with gold at the following rates of pre- mium in the under-mentioned years: 1816, 2 per cent. ; 1816, October to December, under 1 per cent. ; 1817, 2; 1818, 5; 1819, 6J-; 1820 and 1821, par. On the renewal of the charter in 1844, Sir Eobert Peel, then prime minister, having become satisfied of the dangerous in- fluence exerted in its ever varying and never stable system, first of expansion and then of contraction, in its loans, thought to provide a remedy. The principal feature of this measure was to limit the circulation so that it would be regulated by the amount of coin and bullion in the vaults of the institution. Accordingly, ho brought in a bill which became a law on July 19, 1844, entitled " An act to regulate the issue of bank notes, and for giving to the governor and company of the bank of England certain privileges for a limited period." The follow- ing abstract of parts of that law will give an idea of such provisions as refer to the bank of England: 1. Provides for "the issue depart- ment of the bank of England," which shall pro- vide the notes payable on demand, and shall, from Aug. 81, 1844, he kept wholly separate and distinct. 2. That on Aug. 81, 1844, the hank shall transfer to the issue department securities to the value of 14 millions, the debt due by the public to be deemed part ; that the banking department shall transfer to the issue department all the gold coin and gold and silver bullion not required; that the issue department shall deliver to the banking department such an amount of notes as with those in circulation shall equal the securities, coin, and bullion trans- ferred to the issue department ; that the bank may not increase, but may diminish the amount, and again increase it to any sum not exceeding 14 millions. 3. That the bank shall not retain in its issue department at one time silver to any amount greater than one fourth the gold held at the same time. 4. That notes may be demanded for gold bullion at the rate of 3 17s. 9<Z. per oz. of standard gold. 6. Provides for a weekly statement of the affairs of the bank. 7. That the bank shall he exempt from stamp duty on its notes. 8. That the bank allow 180,000 per annum out of the amounts payable by government for the . exclusive privileges of banking. 9. That the public shall receive such profit as may be ob- tained by an increase of circulation beyond the amount provided by section 2. 10. That no other banks of issue be allowed but such as were in existence May 6, 1844. 11. That no banker in England or Wales shall issue any hill of exchange or promissory note payable on de- mand, excepting such bankers as were in ex- istence May 6, 1844. That no company now consisting of six or less than six partners shall, if they exceed that number, be allowed to issue notes. The important provisions of this act were that the bank might issue 11,000,- 000, for which the public debt due the hank should be security, and 3,000,000 on exche- quer bills and such other government securities as it might hold, but that for every pound ster- ling issued beyond the 14,000,000 the bank should hold an equal amount in gold and silver. An examination of the operations of the bank will, we think, demonstrate the fact that Sir Eobert Peel entirely misapprehended the causes at work in producing the fluctuations com- plained of, and that he applied the restrictions to that particular branch which varied but little in a series of years. The real cause of trouble was to be found in the loans, which have been irregular in the extreme and at times produc- tive of great injury. This injury has not alone been confined to Great Britain, but has extend- ed in a greater or less degree to every country with which intimate business relations existed. That this act has had no effect in mitigating this crying evil, will be clearly seen in the fact that these fluctuations have never been more violent than since its passage. The British public had long shown entire confidence in the circulating medium, and no legislation to effect this object was necessary. Within the 28 years which have elapsed since its passage, the operation of this law has three times been suspended, as doubtless it will be again when- ever it is rendered necessary so to do. The first of these was on Oct. 25, 1847, the second on Nov. 12, 1857, and the third on May 11, 1866, on which latter day the bank raised the rate of discount to 10 per cent, it having been 6 per cent, nine days before. In its efforts to save
