Page:The Bank of England and the State, 1905.djvu/12

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The Bank of England and the State.

banking, and their functions as regards currency; for the questions of currency and banking, especially as banking has developed in the United Kingdom, are so closely connected as to be quite inseparable. The history of foreign State Banks would also have to be considered, in order to obtain a correct view of our own system.

We know that the Bank of England is not a State Bank in the strict interpretation of that word. The State has no voice in its management; it has no share except to a quite insignificant extent in its profits. The Bank of England has the management of the National Debt, and it is the banker of the National Exchequer; that is to say, for all practical purposes, it is Revenue Collector and Paymaster for the Government on terms which are arranged from time to time; but these relations are, technically, merely those of an ordinary banker and his customer.

The Bank has also very extensive privileges; the almost exclusive privilege of note issue within a radius of 65 miles from the Metropolis, and practically the exclusive privilege of such issue in England and Wales, its notes alone being legal tender; but the conditions of that issue are laid down by the Act of 1844, and beyond strict compliance with the Act, no special duty is, by law, imposed upon the Bank; yet that such duties exist through an unwritten law, that they have been recognised and are acted upon, is beyond doubt. They affect our commercial life so closely and are so indissolubly connected with the functions and duties which are properly those of the State that to look upon the Bank of England merely as a private trading institution, and not as virtually the State or Government Bank, is an impossibility.

That such is the case is borne out by words used in the opening statement made by Sir Robert Peel, when in 1844 he introduced his Bill for the extension of the Bank Charter. "There is," he said, "no contract, public or private, no engagement, national or individual, which is unaffected by it. The enterprises of commerce, the profits of trade, the arrangements