care, and there was no pretence for saying that such banks were an encroachment upon the monopoly of the Bank. The Bank, as originally founded, was a bank of issue, and the monopoly first granted in 1697 must be held to refer only to banks ejusdem generis. Such had been the uniform language of all the subsequent Acts. The clause upon which their monopoly rested was strictly confined to the issue of paper money. Banks of deposit were lawful at common law, and it rested with those who said it was forbidden, to point out the Act which prohibited them

60. The chief provisions of the Act were as follows (Statute 1833, c. 98)—

1. The Bank was continued as a Corporation, with such exclusive privileges of banking as was given by the Act, for a certain time, and on certain conditions, during which time no society or company exceeding six persons should make or issue in London, or within sixty-five miles thereof, any bill of exchange or promissory note, or engagement for the payment of money on demand, or upon which any person holding the same may obtain payment on demand. But country bankers might have an agency in London for the sole purpose of paying such of their notes as might be presented there

2. For the purpose of removing any doubts that might exist as to what the exclusive privilege of banking which the Bank of England enjoyed consisted in, it was enacted that any body politic or corporate, or society or company, or partnership, of whatever number they consisted, might carry on the business of banking in London, or within sixty-five miles thereof, provided that they did not borrow, owe, or take up in England any sum or sums of money on their bills or notes payable on demand, or at any less time than six months from the borrowing thereof, during the continuance of the privileges of the Bank of England

3. All the notes of the Bank of England, payable on demand, which should be issued out of London, should be payable at the place where they were issued.

4. Upon one year's notice, to be given within six months after the expiration of ten years from the 1st day of August, 1834, and repayment of all debts due by Parliament to the

Bank, its privileges were to cease and determine at the end of the year's notice

5. So long as the Bank paid its notes on demand in legal coin, they were declared to be legal tender of payment, except by the Bank itself, or any of its branches. No notes not made specially payable at any of the branches were liable to be paid there; but the notes issued at all the branches were to be payable in London

6. Regulations about publishing its accounts, and exemptions of bills and notes not having more than three months to run, from the usury laws-these being altered now, need not be detailed

7. The public were to pay off one-fourth part of the debt due to the Bank, and the proprietors might reduce the capital stock of the Bank by that sum if they chose

8. In consideration of these privileges, the Bank was to give up £120,000 a year, from the sum they received for managing the public debt

61. For several years after the renewal of the Bank Charter the harvests were unusually abundant, which caused all sorts of agricultural produce to be ruinously depressed. Wheat fell continuously through 1834 and 1835, till, in the last week in December, 1835, its price was 36s. the imperial quarter. As all agricultural contracts were framed on the expectation that wheat would not be much less than 70s. the quarter, this long-continued depression produced the most severe distress. At the same time, however, all the manufacturing interests were in a state of unexampled prosperity from the abundance and cheapness of food. The long-continued low price of corn caused less to be sown in 1835, and the spring of 1836 was unfavourable. These causes combined to raise the price of wheat in 1836, and the harvest time being wet and cold, caused the price to rise to 61s. 9d. in the autumn

62. The state of extraordinary prosperity enjoyed by the commercial interests during 1833-34-35 gave rise to an immense amount of speculation and dabbling in foreign loans, as if people seemed incapable of learning wisdom from the experience of 1825. The unexpected success of the first railway gave rise to a con

siderable amount of speculation in the formation of railways. An immense extension of the joint stock banking system economised capital to a great degree, and afforded the means of the most fatal extension of credit. On the 14th August, 1834, Lord Wharncliffe called the attention of the Ministry to the prodigious extension of joint stock banks and their branches, and the insufficient capital they were trading with. The important subject of joint stock banking was brought before the House of Commons in 1836, and a Committee was appointed to inquire into it. The Committee sat during the Session and made two reports, which will be noticed in a subsequent chapter. This fever of speculation reached its acme in the spring of 1836. Mr. Poulett Thompson, President of the Board of Trade, said in the House of Commons on the 6th of May, 1836—

"It is impossible not to be struck with the spirit of speculation which now exists in the country, but I believe that there is a great difference in the state of things and what took place in 1825. The spirit of speculation was then turned to foreign adventure of the most extraordinary description; but now speculation is directed to home objects, which, if pushed too far, may be very mischievous, though the consequences may not be quite so mischievous as in 1825. But really, on turning to any newspaper, or any price current, and observing the advertisements. of joint stock companies upon every possible subject, however unfit to be carried on in the present state of society, every man must be struck with astonishment at the fever which rages at this moment for these speculations. I felt it my duty some time ago to direct a register to be kept, taking the names merely from the London and a few country newspapers, of the different joint stock companies, and of the nominal amount of capital proposed to be embarked in them. The nominal capital to be raised by subscription amounts to nearly £200,000,000 and the number of companies to between 300 and 400. The greater part of these companies are got up by speculators, for the purpose of selling their shares. They bring up their shares to a premium, and then sell them, leaving the unfortunate purchasers, who are foolish enough to invest their money in them, to shift for themselves. I have seen also, with great regret, the extent to which joint stock banks have sprung up in different parts of the country. I believe, indeed, that great good has arisen from

joint stock banks, but the observations I have made with regard to other companies are equally applicable to many of the joint stock banks that are springing up in different parts of the country, and the existence of which can only be attended with mischief"

63. We have seen that since the Bank of England had adopted the principles of the Bullion Report in 1827, the method they adopted of carrying them into effect was to keep their "securities" as nearly as possible even, and to keep their bullion and cash equal to one-half the "securities;" the bullion, cash, and securities being together equal to their "liabilities." Having got the Bank into this position while the exchanges were at par, to throw any action either of increase or decrease of their issues of notes entirely upon the public, either by means of the foreign exchanges or by an internal extra demand for gold. The Bank was got into this normal condition in October, 1833, when its "liabilities, i.e., the issues and the deposits, were £32,900,000, the "securities" were £24,200,000 and the bullion £10,900,000. Some transactions with the East India Company and speculations in South American stock occurred to derange these proportions in 1834, and caused an export of specie; but in 1835 the foreign exchanges became favourable and the drain was arrested. But in the meantime the Bank had totally lost all power of preserving the proportion between the bullion, securities, and liabilities it had professed to adhere to. The following table, taken at intervals, will exhibit this very clearly

This was the lowest point which the amount of bullion reached, and the drain was arrested. The above table shews how totally deranged the proportions were to what the directors considered to be a proper position for the Bank. From that time bullion continued to flow in, till, in March, 1836, it slightly exceeded eight millions; but, even then, the securities were three times the bullion, instead of twice, as they ought to have been

64. The amount of bullion in the Bank was at its height in March, 1836, and then began steadily to decline again; in the middle of July it had fallen below six millions, when the Bank thought it was necessary to endeavour to stop it, and it raised the rate of discount to 4 per cent. This had no effect, however, in stopping the demand for discount. In September the bullion barely exceeded five millions, and the Bank raised the rate of discount to 5 per cent. Now the bubbles blown in the preceding year and spring of 1836 were fast bursting on all hands

65. The drain on the coffers of the Bank proceeded at a rapid rate, both from external and internal causes. President Jackson had determined that the Charter of the National Bank of the United States, which expired in 1836, should not be renewed, and that the currency of that country should be placed on a sounder footing than it had hitherto been, by forming a sound metallic basis. Operations to effect this purpose soon commenced. Immense quantities of American securities of all sorts were imported into England, and negotiated for the purpose of remitting the specie to America. The improperly low rate of discount in this country, favoured by the inordinate multiplication of Banks, enabled a great quantity of these securities of various descriptions to be realized in England, and the cash was remitted to America

66. The joint stock banks had been blowing the bubble of credit to the utmost tenuity, by re-discounting most of the bills which they discounted. This practice largely increases the proportion of paper currency compared to the metallic basis, and, of course, adds to any peril in times of discredit. The Bank of England, at length, but too tardily, as has almost invariably been the case, awoke to the impending danger, and determined to