Page:The Bank of England and the State, 1905.djvu/20

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The Bank of England and the State.

65-mile limit. It appears that the 65 miles are to be measured from the steps of the Royal Exchange.

Of far greater importance to bankers is the Act of 1833, by which the Bank Charter was extended till 1844. Gradually we perceive not an extension, but a limitation of the privileges of the Bank; and the Act of 1833 is but the prelude of 1844, which resulted in the creation of the two departments, the Issue and the Banking Departments of the Bank, and thus separated the Bank's various functions. In 1833 authority was given to any company or partnership to carry on the business of banking in London, or within the 65 miles radius, provided they did not owe or take up in England any sums of money on their bills or notes payable on demand or at any less time than six months.

It was further enacted that the Bank of England notes were to be legal tender, except at the place of issue, and thus with the establishment of joint stock banks in London, and the principle of the legal tender of the Bank of England note, the foundations were laid for our present currency system, although at the time, and even in 1844, no one could have contemplated the development joint stock banking was to take.

I must assume that you are acquainted with the principles and the provisions of the Act of 1844. In order to fully understand the causes which led up to it, the various monetary crises which had occurred during the century, the drains of bullion and the fears engendered thereby, must be studied. Subsequent crises deserve equal attention in order to arrive at a conclusion as to whether the Act accomplished the desired end. The debates in the House of Commons at the time, and especially the Report of 1858, which I have already mentioned, of a Select Committee appointed to enquire into the operation of the Bank Act, should be carefully read, as they throw the best possible light on the aims the framers of the Act had in view, and what they understood the duties of the Bank of England to be.

A new principle of importance was introduced in this Act of 1844, inasmuch as the Charter was continued with all its powers and privileges, not for a definite period, as heretofore, but