276 BANK itself and comply with the absurd provisions of the bank act, it spread ruin and desolation around it, and years have been necessary to enable the country to recover from the effects of the panic thus created. While the notes of the bank are legal tender elsewhere, they are not such in payments by the bank itself. Its condition on Oct. 16, 1872, was as follows: ISSUE DEPARTMENT. Notes issued.. Government debt 11,015.100 Other securities 8.984900 Gold coiu and bullion 19,828,780 84,828,780 BANKING DEPARTMENT. Proprietors' capital 14.553.000 Best 8,145,478 Public deposits, including exchequer, savings banks, commissioners of national debt, and dividend accounts 5,510,196 Other deposits 19,405,772 Seven-day and other bills 463,852 43,187,798 Prior to the establishment of the bank of Eng- land, banking in London was conducted first by the Jews, who were succeeded by the Lombards, who were in turn supplanted by the goldsmiths. The latter lent money at rates much below those charged by their predecessors, and they issued promissory notes payable on demand, or at a certain period after date. These bankers de- posited their funds at the royal mint in the tower of London. This practice was discon- tinued when Charles I., being in want of money, seized the amount thus deposited, 200,000, by which means the bankers were utterly ruined. During the civil war the business of the gold- smiths largely increased, and during the com- monwealth, as well as subsequently, various plans were devised by different individuals for the establishment of public banks. No action was, however, taken to mature and carry out these plans until the establishment of the bank of England. After the seizure of the funds by Charles I., it was the practice of the goldsmiths to deposit their surplus means in the exchequer, which funds were drawn once a week, to meet such demands as might be made upon their owners. Charles II. in 1672, being in want of money, closed the exchequer, and seized the funds belonging to the goldsmiths, amounting to 1,328,562, on which there accrued 25 years' interest, making thereby a sum total of 3,321,- 313. No consideration was given for any part of this large sum, except 664,263, for which government loan was issued, forming the basis of the present national debt of Great Britain. As may readily be imagined, the goldsmiths were ruined irretrievably by this infamous pro- ceeding. The earliest country bank established in England, of which there exists any record, was at Newcastle-on-Tyne, in 1755. This was a bank of issue. From that period the number of these institutions increased. On the renewal of the charter of the bank of England in 1708, the bank obtained the privilege of banking to the exclusion of all copartnerships of more than six persons. In consequence of this law, the various joint-stock banks in existence at the time were compelled to wind up their affairs. In 1825, however, an act was passed allowing Government securities 18.256,546 Other securities 21,830,271 Notes 7,889,125 Gold and silver coin 661,856 48,187,798 copartnerships of more than six persons to carry on business in England as bankers 65 miles from London, with the provision that each stockholder should be liable for the entire debts of the bank. Notwithstanding the provisions of this law, which would seem to prevent any joint-stock bank being estab.ished within 65 miles of London, in 1834 the London and West- minster bank was founded, and hns been in operation ever since, although not without hav- ing troubles to encounter.* Litigation with the bank of England, and other difficulties, at first beset it, but through all of these it passed, and has met with high success. Since the establish- ment of thisinstitution, various others of the kind have been founded in and about London. By the issue act of 1844, no bank in any part of the United Kingdom which did not on May 6, 1844, issue notes, was allowed thereafter to exercise that privilege. By an act passed during the same year, with reference to joint-stock banks in England, so many restrictive clauses were introduced as practically to prevent any new institutions of the kind from being established. Within a recent period, however, the passage of a new act more liberal in its provisions has recognized limited liability, and under it 30 insti- tutions are in operation throughout the United Kingdom at the present time (December, 1872). Perhaps nowhere in the world does the his- tory of banking show greater instability than in England, where during this century joint- stock banks have failed by scores. Their prof- its have in many instances been very large, but their risks being correspondingly great, their failures have been most disastrous. Greater freedom has always existed in Scotch bank- ing than in that of England, and consequently there has been greater security those institu- tions, unlike the great monopoly, trading upon their own capital. The earliest bank estab- lished was the bank of Scotland, founded in 1695 ; followed in 1727 by the royal bank of Scotland, in 1746 by the British Linen com- pany, in 1810 by the Commercial bank, and in 1825 by the National bank. In addition to these, joint-stock banks with limited liability have been allowed freely to be established.
