patent, to incorporate the contributors by the name of "The Governor and Company of the "Bank of England," with the power" of deal

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ing in bills of exchange, or buying or selling "bullion, gold, or silver; or selling any goods, 66 wares, or merchandise whatsoever, which shall really or bona fide be left with the said corpo"ration for money lent and advanced thereon, " and which shall not be redeemed at the time "agreed on, or within three months thereafter."

No exclusive privilege was granted to the Bank at its first establishment; but three years afterwards, when it was enabled to enlarge its capital by receiving further subscriptions, it was provided, "that during the continuance of the "Governor and Company of the Bank of Eng"land, no other Bank, or other Corporation,

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Society, Fellowship, Company, or Constitu"tion, in the nature of a Bank, shall be created "or established, permitted, suffered, counte"nanced or allowed by Act of Parliament within "this kingdom."*

It would seem, however, that some chartered companies, previously established, had attempted to carry on the business of banking: for some years afterwards, upon the recital of its act of establishment, and that "some corporations, by

* 8 & 9.W.3. c. 20. § 28.

"colour of the charters to them granted, and ،، other great number of persons, by pretence of "deeds or covenants united together, having

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presumed to borrow great sums of money, and "therewith, contrary to the intent of the said act, to deal as a Bank, to the apparent danger "of the established credit of the kingdom," the Bank got a clause introduced into an act of parliament passed in the year 1710*, by which it was enacted, that, "during the continuance of the "Governor and Company of the Bank of England, "it shall not be lawful for any body, politic or

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corporate, whatsoever, created or to be created, "other than the said Governor and Company of "the Bank of England, or for other persons what66 soever, united or to be united in covenants or partnership exceeding the number of six per

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sons, in that part of Great Britain called Eng

land, to borrow, owe, or take up any sum or "sums of money on their bills or notes, payable "at demand, or at less time than six months "from the borrowing thereof."

This exclusive privilege could not fail to retard the establishment of banking companies in England; and when they came to be established, they appear to have been so insignificant as to put forth notes for sums even under twenty

* 6 Anne, c. 22. § 9.

shillings. The first enactment we find concerning them is in the year 1775, when an act was passed to prevent the issue of notes for sums under twenty shillings*, which were altogether prohibited; and notes for sums under 5l. were put under such regulations, two years afterwards, as made it impossible for bankers to issue them.+ The consequence of this exclusive privilege has been, that, with some few exceptions‡, bank† 17 G. 3. c. 30.

15 G. 3. c. 51. The chief exceptions are in the county of Lancaster, but they have arisen from this very exclusive privilege. It being impossible that any six persons could be found equal to the money transactions of that large manufacturing and commercial county, a peculiar currency has been resorted to. All manufacturers in that county having correspondents in London to whom they send goods for the purpose of being sold, or direct remittances to be made for goods sold elsewhere, it suits them to draw upon London. This they generally do at short dates for sums of, or under, 50%. Such bills of exchange form the main currency of Lancashire. Each drawer or payer endorsing his name, or the name of his firm upon them, as he uses them in making payments; and before any such bill of exchange arrives in London for liquidation, the names of twenty or thirty indorsers appear on it, all of whom thus become sureties to each other and the public. Such bills of exchange are deposited with bankers, until they are required for making payments. Bankers in Lancashire are thus depositaries not of the money, but of the bills of exchange of others, which they issue upon the orders of their customers and at their risk; and if this exclusive privilege shall be continued, mercantile men in other places, and even, perhaps, in the city of London, may contrive a similar system for themselves.

ing companies in England do not follow the business of banking as a substantive trade, but for the purpose of carrying on some other trade, to which the business of banking is aiding and assisting.

Banking companies in England have thus not only the risks of banking to encounter, but also the risks to which such other trade is exposed.

The Bank of England itself does not carry on the business of banking as a substantive concern. It is the factor as well as the banker of the state, and often advances money to this great customer to the prejudice of its other customers, and often to its own inconvenience, and sometimes even danger. It also deals largely in the purchase and sale of Exchequer bills, by which it expands or contracts its circulation at pleasure; and the contraction is always more sudden than the expansion, to the derangement of the general industry of the country, and the not unfrequent ruin of individuals.

CHAP. II.

FURTHER CONSEQUENCES OF THE EXCLUSIVE PRIVILEGE OF THE BANK OF ENGLAND.

BESIDES the consequences adverted to, this exclusive privilege is liable to the following objections:

1. The amount of currency in England perhaps does not exceed 60,000,000l., of which perhaps not so much as one third is in gold and silver; but the sum of labour, and of the products of labour, put and kept in motion by these 60,000,000l. is perhaps not less than 600,000,000l.; a large portion of which (perhaps one half) is embodied in bills of exchange discounted by bankers; so that the security of transactions does not consist in a metallic currency, as is generally supposed, but in the solidity of banking establishments based upon a metallic standard, all of which are rendered insecure by this exclusive privilege of the Bank of England.

2. Of the paper currency of England perhaps not more than one half of it, or a third of the whole (paper and metallic), is in notes of the Bank of England. Its exclusive privilege, there