The Bank of England – Part IV

 

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Part IV of our series on the origins of the Bank of England – its from the book London – Volume 3 published in 1824 by Sholto and Reuben Percy – Brothers of the Benedictine Monastery.

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The Bank of England – Part IV

The restriction on cash payments, authorized by the privy council in 1797, and confirmed by an act of parliament, though intended as a temporary measure, was continued by various legislative acts until the month of September, [1817], when the Bank issued a notice that cash would be given for all their notes of £1 and £2 value, dated previous to the 1st of January, [1816]: so great, however, was the demand for cash, that in the course of two years, from the 1st of January, [1817], to the 1st of January, [1819], the gold coin issued amounted to £1,596,356 in guineas and half guineas, and £4,459,725 in sovereigns. Had this sum been withdrawn merely for the purpose of superseding paper money in internal circulation, it would have occasioned no uneasiness; but it was found that it was exported to France at a premium, and that in such quantities, that out of a new coinage of £5,000,000. made by the French government, nearly four millions of it was out of the coin of this country.

In order, therefore, to prevent such a drain of the precious metals, it was determined once more to interdict cash payments. After this measure was adopted, two parliamentary committees were appointed to investigate the affairs of the Bank; In the report of the secret committee of the House of Commons, dated May 6, [1819], we have a clear and decisive proof of the flourishing state of the Bank of England, fully justifying that ample confidence which the public have reposed in the stability of its resources. It appears by this parliamentary document, that the sum which the Bank was liable to be called on to pay, in fulfilment of its engagements, on the 1st of January, [1819], was £33,894,580. and that it was then in possession of government securities, and other credits, to the amount of £39,096,900. leaving a surplus in favour of the Bank of England, of £5,202,320. exclusive of the permanent debt due from government to the Company, of £14,686,800 repayable on the expiration of the charter. Thus the total capital of the Bank exceeds twenty millions sterling.

The proposal again to restrict the Bank from payments in cash, met with considerable opposition in both houses of parliament, though the usual orders of the house were suspended, that the bill might pass through all its stages in one day; and it passed through the commons on the 5th of April, [1819], and through the lords on the following day. This act, which is known by the name of Mr. Peel’s Bill, limited the restriction to the 1st May, [1822], on which day cash payments were resumed, and have continued uninterrupted, and unlimited to the present time.

Excerpt from London Volume 3 1824 by Sholto and Reuben Percy – Brothers of the Benedictine Monastery

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