Bank. The qualification for the deputy governor was £3,000, and for directors £2,000. The governor was also required to take an oath to the effect that he would "to the utmost of his power by all lawful ways and means endeavour to support and maintain the body politic or fellowship of the government and company of the Bank of England and the liberties and privileges thereof."

Similar oaths had to be sworn by the deputy governor and directors and they also had to swear that they were possessed of a sufficient holding of stock in the Bank. Oaths were also administered to electors before they could give any votes in the general courts and also to all the "inferior agents or servants for the faithful and due execution of their several places and trust in them reposed." It was also appointed that "no dividend shall at any time be made by the said governor and company save only out of the interest, profit, or produce arising out of the said capital stock, or fund, or by such dealing, buying, or selling as is allowed by the said act of Parliament, and that no dividend whatsoever shall at any time be made without the consent of the members of the said corporation in a general court, qualified to vote, as aforesaid."

The management of the Bank was left in the hands of the governor, deputy governor, and directors, subject of course to the by-laws and directions that might at any time be passed by the general court of proprietors. Custom has enacted that its directors should never be chosen from the ranks of the other bankers. They are generally taken from the merchant firms and accepting houses.

The charter did not make any definite statement concerning one point which has occasionally been debated and discussed in later days, viz, the question of any liability upon holders of Bank of England stock. It has occasionally been contended that there is no limitation on the liability of holders. But it need not be said that the question has never been a practical one. Under the national debt act of 1870, which regulated the payment of the dividends on the national debt of Great Britain, it was provided, among other things, that until all the stock of the English debt had been redeemed the banks of England and Ireland should each continue to employ within their offices a fit person as their chief cashier and another fit person as their accountant general. Apart from these provisions, the law has left the question of the management and organization of the Bank of England to the discretion of the proprietors and their directors.

The Bank of England's note issue has been regulated in a manner which is well known by Peel's Act of 1844, which laid down that the amount of its fiduciary issue, that is to say, its issue of notes against securities rather than bullion, was to be restricted to 14 millions, and that above that point for every note issued the Bank should hold metal in its vaults. It was also enacted that if the issues of any country banks which had the privilege of note issue were subsequently to lapse, the Bank of England should be empowered to increase its fiduciary issue to the extent of two-thirds of the lapsed issue. By means of these lapses the amount of the fiduciary issue has been raised from the 14 millions mentioned in the act of 1844 to £18,450,000.

It is also well known that Peel's Act of 1844 provided for the separation of the Bank's functions into two separate departments, one of which it called the "issue department" and the other the "banking department," the promoters of the act being apparently of opinion that there was some essential difference between note issuing and the other functions of the banker, and that note issuing ought to be very specially regulated and restricted, and that as long as this were done all would be well with the currency arrangements of the country.

A good deal of confusion appears to have prevailed in the minds of those who were responsible for this curious piece of legislation. It speaks of the "Bank of England's exclusive privilege of banking," whereas the only exclusive privileges that the Bank of England possessed were connected with note issue, and at the same time it draws a hard and fast line between banking and note issuing, as if the two functions were wholly separate. The principle on which it was based, which appears to have been the theory that the issue of notes was the only form of currency that needed regulation or care, involves an extraordinary oversight when it is remembered that ten years before this act was passed joint stock banks had been founded in London, solely for the purpose of conducting deposit banking and handling the check currency which deposit banking creates.

It is perhaps fortunate for English banking that the legislature took so one-sided a view of the system which it was attempting to regulate. Its regulation of the note issue consisted in drawing a cast-iron line, beyond which

no note was to be issued except with a full bullion backing. It thus, as far as it understood banking, took away from the banker the whole of his discretion concerning the amount of bullion which he was expected to keep against his liabilities. Had it recognized that the check currency, though only in its lusty infancy, was likely to drive the bank note out of circulation for the ordinary purposes of commerce and finance, it may be supposed that it would have dealt with its creation in an equally drastic manner. Fortunately it did not perceive this development, though it had already made great progress; it consequently left a door open by which English banking has been able to develop unfettered and unrestricted. The regulations on the Bank of England's note issue are now a matter of minor importance., When the banking community goes to the Bank of England for assistance, it does not ask it for notes, but for a credit in the books of its banking department. As has been shown in previous sections of this memorandum, at the end of the half years, when the English monetary community finds it necessary to create a large amount of emergency credit and currency, it carries out this operation easily and simply by taking security to the banking department of the Bank of England and obtaining, to the extent of 15 or 20 millions, fresh credits in its books, which are regarded for English banking purposes as equivalent to so much gold.

The bank act of 1844 also enacted that the Bank of England should publish once a week a statement of the assets and liabilities of its two departments, and a copy of one of these statements is here appended.

BANK OF ENGLAND.

An account pursuant to the act 7 and 8 Vict. cap. 32, for the week ending on Wednesday, the 10th day of March, 1909.

Public deposits (including exchequer, savings banks, com

missioners of national debt, and dividend accounts____ Other deposits---

Seven-day and other bills.......

£14,553,000 3,691, 483

17, 267, 641 39, 876, 393 26, 576

75, 415, 093

These weekly accounts are commonly called "the bank return," and are closely studied as containing the key to the position of the Bank of England and the available resources of the London money market. It will be seen