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 TRANSACTIONS 
 
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 MANCHESTER STATISTICAL SOCIETY 
 
 ON THE 
 
 INFLUENCE OF A NOTE CIRCULATION 
 
 IN THE 
 
 CONDUCT OF BANKING BUSINESS. 
 
 BY 
 
 Mr. b, h. inglis palgra ye. f.s.s. 
 
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 i 
 
 MANCHESTER STATISTICAL SOCIETY 
 
 On the Influence of a Note Circulation in the 
 Conduct of Banking Business. 
 
 By AIe. R. H. Ixglis Palgrave, F.S.S. 
 [Read 14th March, 1877.] 
 
 I. Introductory Remarks. 
 II. Early History of Banking in England. 
 
 III. Banking Deposits and Circulation in Great Britain compared. 
 
 IV. Uses of a Note Circulation. 
 
 V. Banking Deposits and Note Circulation in Scotland compared. 
 VI. Ditto Ditto in Ireland Ditto. 
 
 VII. Ditto Ditto in Sweden Ditto. 
 
 VIII. Ditto Ditto in other countries compared. 
 
 IX. The Influence of a Circulation when issued by a "Commercial" 
 
 Bank, and a " State " Bank compared. 
 X. Legislation in this Country respecting Circulation. 
 XL The Paper Circulation, the Metallic Circulation, and the General 
 Business of the Country. 
 XII. The question, whether the issue of Notes is a prerogative of the 
 State. 
 
 XIII. The course of the Note Circulation of this Country since the Act of 
 
 1844. 
 
 XIV. The Rate of Discount from 1825 to 1844. 
 XV. The Rate of Discount from 1845 to 1876. 
 
 XVI. The Rate of Discount from 1825 to 1844, and from 1845 to 1876, 
 
 compared. 
 XVII. The Influence of the Scotch demands for Circulation in the 
 months of May and November. 
 XVIII. Concluding Remarks. 
 
 I. — Introductory Remarks. 
 The subject which is named in the heading of this paper is a 
 very large one. From the commencement of banking in this 
 country the power of issuing notes has always been highly 
 
 v 
 
 3G349 
 
1 w ME - E, H. INGLIS PALGKAVE, 
 
 prized. One might go further than this and say, and with perfect 
 truth, that in the earliest infancy of banking it was the only 
 power which was thought of any value at all. The power of 
 issuing -notes payable on demand," was the great privilege of 
 the Bank of England confirmed to it by the Act of 1707. The 
 right of private banks to issue notes remained at that time 
 unrestricted, but no other corporate body could do the like till by 
 the Act of 1826 the -'exclusive privilege" of the Bank of 
 England in this respect, was modified. It is not proposed to go 
 further into this part of the question here, but to examine into 
 some of those points in which the use of an issue of notes mainly 
 consists, and which may deserve consideration. 
 
 " Money, the great wheel of circulation, the great instrument 
 of commerce, like all other instruments of trade, though it makes 
 a part, and a very valuable part, of the capital, makes no part of 
 the revenue of the society to which it belongs. The machines 
 and instruments of trade, &c, which compose the fixed capital 
 bear this further resemblance to that part of the circulating 
 capital which consists in money; that as every saving in the 
 expense of collecting and supporting those machines which does 
 not dimmish the productive powers of labour is an improvement 
 of the net revenue of the society ; so every saving in the expense 
 of collecting and supporting that part of the circulating capital 
 which consists in money, is an improvement of exactly the 
 same kind 
 
 ''The substitution of paper in the room of gold and silver 
 money, replaces a very expensive instrument of commerce with 
 one much less costly, and sometimes equally convenient. Circula- 
 tion comes to be carried on by a new wheel, which costs less both to 
 erect and to maintain than the old one."— Adam Smith, " Wealth 
 of Nations," Book IT., Chap. 2. 
 
 These remarks, though written more than a century since, place 
 the matter before us in so clear a light that it is impossible to find / 
 
 a more lucid description of the economy caused by the use of notes ' 
 
OX Xoll'. < IKCTIATION IX HIE CONDUCT 01 BANKING BUSINESS. 73 
 
 as part of the circulating medium of a country. While every one 
 will admit the importance of this economy, strong differences of 
 opinion have arises as to which method of placing Buch a cur- 
 rency into circulation is preferable — whether through the means of 
 one central bank representing the State, or of more banks than 
 one, in this last case these banks being proprietary and trading 
 institutions. 
 
 Apart from the question of the right of the State to be the 
 sole issuer of bank notes, into which we will enter further on, it 
 will be clear that a considerable part of the usefulness of the cir- 
 culation rests on the fact, whether such an issue when made by 
 several banks may not be of greater advantage on the whole to the 
 trade of a country than if it is in the hands of the State alone — 
 whether it mav not be the case that a note circulation made 
 through the intervention of a great many banks in different parts 
 of the country, may not promote the prosperity of that country to 
 a greater degree than a similar amount of note circulation would do 
 if in the hands of the Government itself, or of one bank alone 
 privileged to issue, and connected with the State by close ties of 
 privilege and mutual assistance. 
 
 The profit which a government can make by levying a tax on 
 the privilege of issuing notes may be great, and there are advan- 
 tages, no doubt, in a note issue centering in one central bank ; but 
 while the State is able to levy taxation as easily through the 
 medium of a stamp duty on a circulation which is in the hands of 
 many banks, as it can on a circulation which emanates only 
 from one bank, it remains to be seen whether a circulation when 
 in the hands of several banks may not promote the prosperity and 
 the commerce of a country more efficiently than when in the 
 hands of one central bank. 
 
 II. — Early History of Banking in England. 
 
 To trace this more distinctly we must go back to the early 
 history of banking in this country. The prosperity of banking 
 
74 Alii. It. H, IKGLIS PALGRAVE, 
 
 depends entirely aud solely on credit ; and in the early stages of 
 banking, during the period in which a country is being accustomed 
 to place credit in bankers, there is no doubt whatever that the 
 existence of this credit has been largely developed by means of the 
 issue of notes. Where large sums of money pass from hand to 
 hand, and cheques are not customary, notes are found to be far 
 more convenient than coin in settling large transactions. The 
 credit thus obtained from a note circulation which has been brought 
 into use through its superior convenience to a metallic circulation, 
 has doubtless been the foundation of many banks, some of which 
 have failed, not so much from an over-issue of notes as from a 
 wrong use of the credit which they obtained by issuing them. 
 The records of banking in England, even so recently as forty or 
 fifty years ago, are very scanty. The following statement includes 
 most of the information which can be gleaned on the subject, and 
 it certainly shows that at a period not very remote, the circulation 
 of notes was a far more important thing to banking in this country 
 than at the present time. 
 
 It was the misuse of the credit thus obtained which led to the 
 disfavour into which the provincial note circulation fell early in this 
 century, with many statesmen and some economists. It was con- 
 sidered by these that bankers had the power of issuing notes at 
 will to any extent. This power, however, it is obvious that 
 bankers could not possess, as no one will retain in his possession 
 for any length of time a greater number of notes than he requires, 
 when the banker can be compelled to cash them. It was not, 
 however, the power of issuing notes which bankers in some cases 
 misemployed — it was on the use which they made of this power of 
 giving credit, placed in their hands through the credit which 
 others gave them, that their prosperity and the prosperity of the 
 community turned. Prices may have been influenced and markets 
 acted on, by the manner in which men to whom bankers may have 
 given undue credit engaged in rash speculations. But these things 
 were not the result of the issue of notes. They would have 
 
OX XOTF. CIRCULATION IN Till' CONDUCT OF BANKING BUSINESS. 75 
 
 occurred in exactly tlie same manner had the funds employed in 
 
 speculation proceeded from deposits, and the hankers not issued a 
 Bingle note. What was Been, however, was taken to he the cause, 
 and the misfortunes which arose from a rash use of credit were 
 confounded with the form in which that credit was given. 
 
 It will assist us in comprehending this part of the subject, to 
 compare, as far as can be done, the amount of the deposits held by 
 hankers in England and the note circulation at various periods. 
 Though the dates are still recent the information is very imperfect, 
 but some idea can be obtained of the amounts both of deposits and 
 of circulation at several periods. There are various rough estimates 
 still existing made at dates early in the century, which form some 
 guide, and some facts cau be gleaned from authentic sources. 
 
 III. — Banking Deposits and Circulation in Great Britain 
 
 compared. 
 
 From 1805 to 1825 the private deposits in the Bank of England 
 rarely amounted to more than one million, and never exceeded two 
 millions. In 1 828 these deposits rose to five millions for the first time. 
 The particulars are given in "Marshall's Digest. It is difficult, almost 
 impossible, to form any calculation, however rough, of the amount 
 of deposits which other bauks held at that date. The following, 
 however, are some estimates of the amounts held by the banks in 
 this country at various later dates in the century. The first two 
 of these, though they are interesting, as assisting us to form an 
 idea of the vast growth of the business and the wealth of the 
 country between the years 1825 and 18 45, yet are of less service 
 because they include only portions of the whole field, and at the 
 present time it is absolutely impossible to supply what is deficient 
 in them. An estimate in an anonymous pamphlet, published by 
 Effingham Wilson in 1834, calculated the deposits of the London 
 bankers only as 26 £ millions. In this estimate the public deposits 
 held at that time by the Bank of England and the sums held by 
 the London bankers, on account of banks in the country, are not 
 
76 MR. R. K. IXGLIS PALGRAVE 
 
 included. A calculation made by Mr. J. Gr. Hubbard for the date 
 1832-41, placed the deposits held by country bankers at from 16 
 to 20 millions. This calculation apparently refers to England 
 only. 
 
 An estimate made by Mr. G. "W. Norman, in giving evidence 
 before the Select Committee of the House of Commons on banks of 
 issue, in 1840, is as follows : — 
 
 Banking Deposits, London, including Bank of England.. 30 millions 
 
 English Provincial Banks, Private and Joint Stock .... 40 ,, 
 
 In Scotland 18 to 20 „ 
 
 In Ireland 10 to 15 „ 
 
 This, if we take the higher estimate of the Scotch banks, gives a 
 total of 100 millions of banking deposits in the country at that 
 time. This is the earliest estimate I have been able to discover 
 relating to the whole of the kingdom. 
 
 A rather later calculation, given by the late Mr. James Wilson, 
 in his speech during the debate on the commercial crisis of 
 1847, was, that the total deposits of the banks of the United 
 Kingdom ranged at that time from 200 to 250 millions. 
 
 These earlier calculations, with the exception of the last, 
 must be regarded as being very rough approximations to the 
 facts. 
 
 Mr. jSTewmarch estimated the total amount of capital wielded 
 by the banks of the United Kingdom as being, in 1851, 
 £260,000,000, including deposits with bill brokers not received 
 from bankers. The corresponding estimate, in " Notes on Bank- 
 ing," published by myself in 1872, is £616,000,000. To this 
 must be added, as effecting banking in this country, the amount 
 belonging to foreign and colonial banks having offices in London, 
 and held in England, which is estimated at that time as being 
 £152,010,000, forming £768,000,000 in all. If we add to the 
 amount stated by Mr. Newmarch a similar estimate of the pro- 
 bable proportion of deposits belonging to foreign and colonial 
 banks in 1851, £25,000,000 would probably have to be added 
 to the amount of £260,000,000 under that heading. 
 
0» NOTE ' il;< i I.VTIOX l\ TIIK CONDUCT ok BANKING BUSINESS. 77 
 
 Mr. Pun estimated in 1876, in his valuable volume of British 
 Banking Statistics, that the capital in the hands of bunkers 
 in the United Kingdom at that date was not less than 
 £782,000,000. To this should be added the amounts held by 
 the foreign and colonial banks, which may be taken at 
 £152,000,000, as given above, thus given a total of 
 £934,000,000. All these are estimates only, but from tho 
 circumstances of banking in this country, only estimates 
 can be supplied. They will, however, assist us in our 
 present enquiry, which is to form a comparison between tho 
 amounts of banking deposits and of notes in circulation in the 
 country. 
 
 The best proof of this will be found in the evidence given 
 before the Select Committee of the House of Commons on 
 banks of i^sue, 1875, as to the proportion of capital, deposits and 
 circulation of the most important issuing joint stock bank 
 in England in 18 44 and in 1875. The statement is subjoined. 
 
 On the basis of the estimates given above, in which the 
 note circulation of the Bank of England and its deposits are 
 also included, the comparison between the deposits held by the 
 banks of the United Kingdom and the notes in circulation will 
 be as follows : — 
 
 Banking Deposits and Note Circulation or the United Kingdom. 
 
 Deposits. Note Circulation. 
 
 1840 £100,000,000 £35,920,000 
 
 1847 250,000,000 36,043,000 
 
 1851 285,000,000 33,376,000 
 
 1872 768,000,000 43,598,000 
 
 1875 934,000,000 45,382,000 
 
 The two earliest estimates — the one in the pamphlet pub- 
 lished by E. Wilson, in 1834, and the one formed by Mr. 
 J. G. Hubbard for the years 1832-41 — are omitted from this 
 comparison, as these two estimates refer to England only, and 
 I desire at this point to compare the deposits and the circulation 
 
78 MR. R. H. I^GLIS PALGRAVE, 
 
 of the country generally. The figures before us are sufficient 
 to show that, while the deposits have immensely increased, the 
 growth of the note circulation has been comparatively small. 
 
 The calculations made by the late Mr. "W. Leatham, of Wake- 
 field, have not been quoted, because, like the two earlier 
 estimates just mentioned, they refer to a portion of the country 
 only. 
 
 Prom an examination of Mr. Leatham's calculations, and a 
 consideration of the estimates given above, it would appear that in 
 all probability down to the year 1 820, perhaps even as late as the 
 year 1830, the liabilities of the banks of the United Kingdom 
 collectively may be considered to have been as great to the 
 holders of their notes as to their depositors. 
 
 These statements of the banking deposits of the country 
 must be understood to be estimates only, but they show, with- 
 out doubt, that the proportion of notes in circulation to deposits 
 was far greater early in the century that at the present time. 
 
 Some idea as to the difference of the position of English 
 banking in this respect at the present time when compared with 
 what it was at an earlier date, can also be obtained from the 
 information supplied to the Select Committee of the House of 
 Commons on Banks of Issue in 1875, as to the growth of capital 
 and deposits between the years 1844 and 1875. This formed 
 part of the evidence laid before that Committee. The replies 
 received from 36 of the most important issuing joint-stock banks 
 in England and Wales show that, while their note circulation 
 had since that date declined, under the provisions of the Act of 
 1844, their deposits had largely increased. This statement will 
 be found in Table A. 
 
 IV. — Uses of a Note Circulation. 
 
 Yet, we should do wrong if we thought that because the note 
 circulation was small at the present time, and reduced in pro- 
 portion to the rest of the business, that it was, therefore, an 
 
OX NOTE CIRCULATION IX Till'. CONDUCT OF JUNKING BUSINESS. 79 
 
 unimportant feature in banking. The value of a note circulation 
 to a bank docs not lie, when properly understood, in supplying 
 it with capital, by means of the credit which the notes obtain ; 
 but it lies in the facilities given to the whole course of business 
 through the economy in working which it provides. It lies in the 
 fact that the possession of a note circulation enables a bank to 
 establish small branches where it otherwise would not answer to 
 establish them, and where a note circulation is entirely unfettered, 
 by other small advantages in carrying on business. This economy 
 is only obtained when a note circulation is in the hands of those 
 banks which carry on business as trading institutions, and is not a 
 State circulation. This will be shown when we come to examine 
 the relative circulations of State banks and other banks, and the 
 amounts of deposits which have been obtained by each. The fol- 
 lowing short abstract of the portion of the evidence given before 
 the Select Committee of the House of Commons on Banks of Issue 
 (1875), which refers to this subject, will explain some of the points 
 in which the power of circulating notes is of service to those 
 banks which possess it. 
 
 "The facilities which a local note circulation supplies to small 
 transactions, and especially in remote districts in the country, were 
 explained in much detail to the Committee. Mr. Seebohm stated 
 that at his bank at Hitchin more than 3,000 cheques on other 
 banks were cashed annually without charge, chiefly to small 
 farmers, stock dealers, butchers, and market gardeners, who sent their 
 produce to towns at a distance, and others. These persons receive 
 in return, from those to whom the goods are sent, cheques drawn 
 on banks at a distance. The local issuing banks are willing to 
 cash these cheques without charge, because their own notes are 
 put into circulation hereby. Mr. Seebohm gave evidence that this 
 practice existed extensively throughout southern and Midland 
 England, and was a great convenience and advantage to the public. 
 Mr. Bagehot supplemented this statement with facts supplied by 
 his o^vn bank (Stuckcy's Banking Company) in Somersetshire. It 
 
80 MB. E. H. IXGLIS PALGKRAVE, 
 
 was shown that the withdrawal of local notes in these districts 
 would practically necessitate a charge being made upon these small 
 transactions of country markets. 
 
 "In England, as in Scotland and Ireland, the existence of the 
 local circulation has facilitated the opening of branches in locali- 
 ties where it would not answer to establish a bank, which did not 
 possess this power of supplying a circulating medium in an 
 economical manner. Mr. Bagehot mentioned that Stuckey's 
 Banking Company had found it advantageous, in order to obtain 
 the circulation of a district, to open branches in remote places 
 where, but for the circulation, such branches would have 
 been unprofitable. 
 
 " The advantage of the local circulation in the way of till-money 
 is very considerable to the issuing banks. It enables a great 
 t economy of capital to be effected. Those banks whose circulation 
 is habitually below their limit find the power of issuing their own 
 notes of great service on occasions, such as fairs, when an except 
 tional though periodic demand is made on them for cash. Mr. 
 Palgrave (Gurneys & Co., Yarmouth) stated that when the boats 
 were paid off at Yarmouth at the close of the herring fishing, such 
 a demand for cash arose. ' I observe/ he said, ' that in the year 
 1873, between the 15th and 22nd of December, a period only of 
 seven days, our note circulation at Yarmouth increased £27,000.' 
 This augmentation in the local issue speedily subsided, but the power 
 of meeting sudden demands in such a manner is of great service. 
 
 "The use of the circulation to the issuing banks depends thus 
 on many points, which are interwoven so closely with the general 
 conduct of their business as to add greatly to its value." 
 
 V. — Banking Deposits and Note Circulation in Scotland compared. 
 The growth of deposits in the Scotch banks has been very 
 remarkable ; the progress of their business in this direction has no 
 doubt been greatly assisted by the power they possess of utilising 
 their note circulation as it may be required. This facility has 
 greatly assisted the extension of the branches of the Scotch banks 
 
ON NOTE CHHTLATIOX rx TUE CONDUCT 01- i:\XKIXG m7STXl><. 81 
 
 into every village and little town throughout the country, and 
 beyond any doubt to it is greatly due the vast amount of deposits 
 which the Scotch banks hold, and which they have collected in 
 great degree from remote places where it would not answer the 
 purpose of any bank which does not possess the same privileges to 
 open an office. 
 
 The particulars, as far as they can bo traced, are as follows : — 
 
 Banking Deposits and Note Circulation in Scotland. 
 
 Deposit^. 
 
 1841 
 =100. 
 
 Circulation. 
 
 1S41 
 = 100. 
 
 1826 21,000.000 
 
 1841 27,000,000 
 
 100 
 in 
 
 200 
 248 
 296 
 
 3,190,000 
 3,550,000 
 3,240,000 
 4,090,000 
 5,320,000 
 6,090,000 
 
 100 
 
 1847 30,000,000 
 
 ill 
 
 1851 36,000,000 
 
 101 
 
 1856 54,000,000 
 
 128 
 
 1872 67,000,000 
 
 1876 80,000,000 
 
 166 
 190 
 
 We observe, therefore, that while the deposits in Scotland 
 have nearly tripled since 1841, the note circulation, though 
 increased, has not augmented in similar proportion ; and it 
 is, to say the least, extremely unlikely that the deposits would 
 have increased with anything like the same rapidity, had the 
 note circulation not existed and enabled the Scotch banks 
 to cover the country with a net-work of bank offices so close and 
 complete, that it is impossible to imagine that any deposit, 
 however minute, can escape them. 
 
 Two of the principal features of Scotch banking, the charging 
 no commission for keeping accounts and the allowing interest on 
 the daily balances, appear, as stated in the evidence of Mr. 
 Davidson, the treasurer of the Bank of Scotland, before the 
 Committee of the House of Commons on Banks of Issue (1875), 
 to be connected more closely with the power of issuing notes, 
 bank mainly through the frequency and extent of the operations 
 upon it — all payments out being made in the bank's own notes, 
 
82 ME, It. n. INGLIS PALGBAYE, 
 
 "It is that system," to use Mr. Davidson's words, " which 
 attracts the large amount of deposits that we keep. The economy 
 of " till-money," by employing their own notes, has greatly 
 facilitated the extension of branches throughout the country. 
 The working of the "cash-credit" system is well exemplified 
 in the following extract from the "Historical Sketch of Scotch 
 Banking," lately published by Mr. Fleming, of the Royal 
 Bank of Scotland : — 
 
 "The cash-credit system is both ingenious and simple. To 
 be able, on credit, to draw on your banker as and when you may 
 find necessary, and to be charged interest only for the time you 
 feel it convenient to use the bank's money, is the ne plus ultra 
 of banking accommodation. That is the essence of the system 
 which, since 1728, has been largely instrumental in the develop- 
 ment of our agricultural and mercantile enterprise. It had its 
 origin, as we see from the first of these minutes, [Mr. Fleming 
 had been referring to the minutes of the directors of the Royal 
 Bank of Scotland instituting the cash credit system, which has 
 ever since been a distinctive feature in Scottish banking. The 
 earliest of them is dated 12th March, 1728] in the desire to 
 encourage trade, and to promote the circulation of the bank's 
 notes. Perhaps if we were to place the latter motive first, we 
 should be doing the directors little injustice ; but that it fully 
 accomplished the other object is matter of history. It is also 
 certain that, on the tchole, cash credits have been granted with 
 such caution in the past that they have proved profitable to the 
 banks as well as most advantageous to the public. But un- 
 doubtedly the system never would have been introduced save for 
 note issues. A cash- credit account was* advantageous to the 
 and all payments in being made in mixed notes. In so far as the 
 notes put out were absorbed by the public, the bank gained the 
 
 * I say was, for the Act of 1844 has made a very material change. The 
 bants have now lost the advantage arising from increase or activity of cir- 
 culation through the operation on such accounts, and cash-credits can only 
 be looked on as one mode of investing their resources. 
 
ON NOTE CIUCUL.YTION IK TllE CONDUCT OF BANKING BUSINESS. 83 
 
 interest as the quid pro qou for the use of its credit. But, of 
 course, the moment the legitimate requirements of the public for 
 paper currency were satisfied, advances on cash-credits became a 
 loan not of credit but of capital ; for although the advances might 
 be in the form of notes, the superfluity "would immediately return 
 on the bank for conversion." — " Scottish Banking. A Historical 
 Sketch," p. 47. By J. S. Fleming. 
 
 VI. — Banking Deposits and Note Circulation in Ireland compared. 
 
 The course of banking in Ireland can be recorded more exactly 
 than of any other part of the British Dominions. The amounts 
 of the private deposits in the Bank of Ireland and the Belfast, 
 Hibernian, National, Northern, Provincial, Royal, and Ulster 
 banks which follow, are derived from the reports published by 
 by Dr. W. Neilson Hancock. The note circulation is added from 
 the annual returns. It should be borne in mind that the arrange- 
 ments of the Act of 1844 allow the note circulation in Ireland, as 
 in Scotland, to extend itself to the amount which the circumstances 
 of the country require. 
 
 Banking Deposits and Note Circulation in Ireland. 
 
 
 Total amount 
 
 Note 
 
 
 Total Amount 
 
 Note 
 
 
 of deposits. 
 
 circulation. 
 
 
 of deposits. 
 
 circulation. 
 
 
 £ 
 
 £ 
 
 
 £ 
 
 £ 
 
 1840.... 
 
 5,567,000 
 
 
 1858 
 
 15,131,000 
 
 6,183,000 
 
 1841.... 
 
 6,022,000 
 
 
 1859.... 
 
 16,042,000 
 
 6,860,000 
 
 1842.... 
 
 6,416,000 
 
 
 I860.... 
 
 15,609,000 
 
 6,839,000 
 
 1843.... 
 
 6,965,000 
 
 
 1861.... 
 
 15,005,000 
 
 6,265,000 
 
 1844.... 
 
 7,601,000 
 
 
 1862.... 
 
 14,388,000 
 
 5,658,000 
 
 1845.... 
 
 8,031,000 
 
 6,949,000 
 
 1863 
 
 12,967,000 
 
 5,404,000 
 
 184G 
 
 8,442,000 
 
 7,259,000 
 
 1864 
 
 15,263,000 
 
 5,594,000 
 
 1847.... 
 
 6,493,000 
 
 6,008,000 
 
 1865.... 
 
 18,619,000 
 
 5,986,000 
 
 1848.... 
 
 7,071,000 
 
 4,828,000 
 
 1866 
 
 20,957,000 
 
 5,884,000 
 
 1849.... 
 
 7,469,000 
 
 4,310,000 
 
 1867.... 
 
 21,794,000 
 
 5,811,000 
 
 1850 
 
 8,268,000 
 
 4.512,000 
 
 1868.... 
 
 22,164,000 
 
 6,180,060 
 
 1851 
 
 8,263,000 
 
 4,462,000 
 
 1S69.... 
 
 22,673,000 
 
 6,607,000 
 
 
 10,773,000 
 
 4,819,000 
 
 1870.... 
 
 24,366,000 
 
 6,879,000 
 
 1853.... 
 
 10,915,000 
 
 5,650,000 
 
 1871.... 
 
 27,348,000 
 
 7,544.000 
 
 1854.... 
 
 11,665,000 
 
 (-,295,000 
 
 1872.... 
 
 1^8,732,000 
 
 7,674,000 
 
 
 12,285,000 
 
 6,362,000 
 
 1873.. .. 
 
 29,210,000 
 
 7,076.000 
 
 1856 
 
 13,703,000 
 
 6,652,000 
 
 1874. . . . 
 
 31,734,000 
 
 6,767.000 
 
 1857.... 
 
 13,113,000 
 
 6,821,000 
 
 
 
 
84 ME. E. H. INGLIS PALGEAVE, 
 
 This statement shows a very considerable and marked increase 
 in the amount of deposits, while there has been really no increase 
 at all in the note circulation. The growth of the deposits is the 
 result of increased wealth and prosperity among the population of 
 the country, and when the amount of the population of that 
 country is taken into consideration, when we remember how small, 
 comparatively speaking, it is, how much it has diminished in 
 recent years, and how widely scattered over a country with 
 comparatively few mining or manufacture g industries, it can 
 hardly be thought that the deposits would have increased to 
 anything like the same extent had not the provincial note circula- 
 tion existed and enabled the Irish banks to open small offices 
 wherever the circumstances of the country required it. It is quite 
 true that all the banks of Ireland do not possess note circulation, 
 but there can be no doubt of the service the note issue has been to 
 those banks which possess it. 
 
 VII. — Banking Deposits and Note Circulation in Sweden compared. 
 
 Sweden is the only other European country which possesses 
 throughout its whole extent, a note circulation in any way 
 analogous to the note issues in Scotland and in Ireland ; and it 
 is worth while to extend our examination beyond our own 
 immediate borders and to observe what the position of banking in 
 Sweden is. The note circulation in Sweden proceeds partly from 
 the Riksbank (bank of the kingdom), and partly from the 
 "Enskilda" banks. 
 
 The first Enskilda bank was established in the year 1830. The 
 present banking law of Sweden, which regulates the method on 
 which the banks of that country are founded, the system on which 
 their accounts are published, and to a great degree their method of 
 administration, dates from the year 1864. The completeness and 
 the excellence of its arrangements are due, in a great degree, to the 
 care of Mr. A. 0. "Wallenberg, who, besides possessing a practical 
 knowledge of banking, is also a member of the Upper Chamber of 
 
ON NOTE CIRCULATION IN TI1E CONDUCT OF BANKING BUSINESS. 85 
 
 the Swedish Diet. The notes of the Enskilda banks have a wide 
 circulation over the whole of the country. Sweden is a country 
 with a poor soil, a rigorous climate, and a Bparee population. It is 
 a country with fewer natural advantages than Scotland or Ireland; 
 but the progress of banking in Sweden, between 180.3 and 187G, 
 which is as far as we can trace it, has been very great indeed. 
 Much of this progress must be ascribed to the pow r er of issuing 
 notes possessed by the Enskilda banks which has enabled them to 
 establish branches in remote villages and districts of that country 
 and has likewise greatly facilitated the conduct of their business. 
 
 The notes of the Enskilda banks of Sweden circulate w r ith the 
 utmost readiness over the whole of the kingdom. The population 
 in Sweden is scattered widely over a very large surface of country, 
 but so good is the credit in which the provincial note circulation is 
 held, that the notes of a bank situated many hundred miles off are 
 taken with the same readiness as those issued in the neighbouring 
 town. The high credit in which the provincial note circulation 
 stands, and deservedly stands, in Sweden, arises from the excellent 
 arrangements in force with regard to the securities held against the 
 notes issued, the stability of the banks which issue them, and the 
 guarantee thus provided that the note circulation is made by solvent 
 institutions. The "regulation of the currency" is effectually 
 provided for by the fact that every note is payable in gold coin at 
 the option of the holder, and that every bank issuing notes is bound 
 under the severest penalties to provide for cashing those notes 
 whenever legally required. By the Banking Law r of Sweden, 
 enacted in 1864, the notes were payable, when presented at the 
 head office of the bank, either, " with coin of the realm or with 
 notes of the Bank of the Kingdom." Among the amendments to 
 this law passed in 1874, was one of the highest importance in 
 preserving the true character of a note circulation : by this amend- 
 ment the power of paying a note with any other paper money, 
 though that paper were the note of the " Bank of the Kingdom ' 
 itself, was taken away, and it was enacted that the notes, when 
 
86 
 
 ME. K. H. INGLIS PALGHAVE, 
 
 presented for payment at the head office of a bank, should be 
 "paid unconditionally with lawful gold current in the realm." 
 This is a very important alteration, and it proceeds on the correct 
 principle that no note should be payable in anything but sterling 
 money. Subject to the conditions we have indicated the bank-note 
 circulation can be almost entirely unfettered. 
 
 The freedom of issue enables the banks to afford to supply their 
 customers with " cash- credits" and bank post bills payable on 
 demand without charge. Such bank post bills are changed with 
 facility by any bank in the country, as every bank knows that the 
 person presenting a bill of this class will be satisfied to take pay- 
 ment for it in the local notes. The trifling profit thus obtained by 
 the banks is sufficient to pay the charge for the transmission of 
 money from one part of the country to another. The charge on the 
 public for sending money from one place to another would, other- 
 wise, in so thinly peopled a country as Sweden is, be a heavy tax 
 on the community. The power of issuing notes has been a most 
 important force in developing the present extension of banking in 
 Sweden. 
 
 The progress of the Swedish Enskilda banks was as follows, from 
 the years 1865 to 1876 :— 
 
 Note Circulation, Deposits and Capital or Swedish Enskilda Banks. 
 
 
 Notes in Circulation. 
 
 Deposit Accounts. 
 
 Current Accounts. 
 
 Capital. 
 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 1865. . . . 
 
 1,860,000 
 
 1,140,000 
 
 406,000 
 
 2,040,000 
 
 1866.... 
 
 1,750,000 
 
 1,340,000 
 
 421,000 
 
 2,250,000 
 
 1867.... 
 
 1,910,000 
 
 1,630,000 
 
 541,000 
 
 2,440,000 
 
 1868.... 
 
 1,700,000 
 
 1,870,000 
 
 544,000 
 
 2,370,000 
 
 1869.... 
 
 1,940,000 
 
 2,480,000 
 
 940,000 
 
 2,760,000 
 
 1870.... 
 
 2,230,000 
 
 2,890,000 
 
 1,240,000 
 
 2,780,000 
 
 1871.... 
 
 2,680,000 
 
 3,770,000 
 
 1,390,000 
 
 2,830,000 
 
 1872.... 
 
 2,985,000 
 
 3,880,000 
 
 1,058,000 
 
 2,517,000 
 
 1876.... 
 
 3,400,000 
 
 8,025,000 
 
 1,332,000 
 
 2,956,000 
 
 The great support which the commerce and industry of the 
 country have derived from the banking system is evident at a 
 glance, and it is equally obvious that without the power of issuing 
 notes banking would have made but little progress in Sweden. 
 
ON NOTE C1UCTLA.TI0X IX THE CONDUCT OP BANKING BUSINESS. 87 
 
 VIII. — Banking Deposits and Circulation in other Countries 
 
 compared. 
 
 It is not very easy in this country to obtain much information 
 respecting the details of banking in other countries, but the 
 following statement of the progress of the Bank of Geneva, a joint- 
 stock bank situated in the city of that name, [Table 13.], and of 
 the Bank of the Canton of Freibourg, in Switzerland, [Table C], 
 will be interesting. Both these statements exhibit the usual 
 features of continental banking, a large note circulation with 
 comparatively small deposits. The growth in the latter, however, 
 is not unimportant, though it is doubtful whether the laws in 
 Switzerland regulating the circulation are in any way as careful as 
 those of Sweden, and when we compare the amounts of deposits 
 held by these banks, and those held by the Bank of Bremen, 
 [Table D.], the latest published accounts of which are also added, 
 with those held by the principal banks on the continent which 
 possess, what we may term, a State circulation, the deposits held 
 by the banks which issue notes on what may be termed strictly 
 banking principles are really large in proportion. Even in the 
 case of the Bank of France [Table F.], it will be seen that the 
 deposits, especially at their branches, are exceedingly small in pro- 
 portion to their circulation. The deposits of the Bank of France 
 at Paris averaged in 1875 about eleven millions ; at the branches 
 (about 74 in number), about a million and a quarter, with an 
 average note circulation of more than ninety-eight millions, while 
 the average deposits of the Imperial Bank of Germany, for 
 1876, were about three millions, with a note circulation of thirty- 
 four millions [Table G.] ; of the National Bank of Belgium, about 
 one million (exclusive of the deposits of the Government), with a 
 circulation of twelve millions ; while the deposits with the National 
 Bank of Austria were almost nil, with a circulation of nearly four- 
 teen millions. [Table H.]. 
 
 The same rule holds good as to banking in Australia and 
 America. From a statement published by Air Nathaniel Cork, in 
 
 <- 
 
88 ME. E. H. IXGLIS PALGEAVE, 
 
 his paper on tlic statistics of Australian banking, the aggregate of 
 the deposits of the Australian hanks in 1872 was £33,466,000, and 
 of their notes in circulation, £3,433,000. If there is a country in 
 which a note circulation might have seemed superfluous it is in 
 Australia — yet we cannot doubt that there also, as in other 
 countries where a note circulation has existed, the power of collect- 
 ing deposits has been greatly stimulated by it. We see the same 
 features exhibited in the accounts of the American National banks, 
 which are obtained from the returns recently published by Mr. 
 John Jay Knox, the comptroller of the currency at "Washington. 
 [Table E.]. 
 
 IX. — The Influence of a Note Circulation when issued by a 
 " Commercial" Bank and a " State" Bank compared. 
 
 We have now investigated, as far as the information accessible 
 will allow, the course of banking in recent years in England, in 
 Scotland, in Ireland, and in Sweden, in Australia and America. 
 The last-named countries all possess note circulations emanating 
 from several banks, banks which are not State banks, and the notes 
 of which supply in great degree the requirements of the people for 
 their cash transactions, thus economising the use of coin, and pro- 
 moting the extension of banking facilities. The latter, it must be 
 observed, is by far the most important function of a note circulation. 
 In England as far as it has existed, and most certainly in Scotland, 
 in Ireland, and in Sweden, the possession of a note circulation has 
 promoted the growth of deposits mainly through the power which 
 a note circulation has given a bank of establishing branches in 
 remote districts where a branch could not otherwise be profitably 
 carried on. This result of the power of issuing notes can be traced 
 less in proportion perhaps in England than in the other countries 
 named, because the greater wealth of England has rendered the 
 advantages a note circulation offers less needed, and also because the 
 system of provincial note circulation has been more imperfect in 
 England ; while in Scotland, Ireland, and Sweden, we may see how 
 
ox note < iiit ri ITION ix tili; conduct or BANKING business. 89 
 
 a system of nolo circulation which has enabled the banks of each 
 country to extend their branches to the remote villages and hamlets, 
 the less wealthy and less peopled districts, has also enabled them to 
 
 collect from these distant and poorer regions those scattered drops, 
 so to say, of the hoarded wealth of the people, which, while secreted 
 in each man's possession, were of service only to him when he 
 needed to employ them, but in the hands of the banks were aggre- 
 gated into fertilizing streams, the causes of plenty in otherwise 
 sterile lands. 
 
 If we compare with the statements of the position of the 
 
 English provincial issuing banks, as far as we are able to trace 
 
 them, of the Scotch, Irish, Swedish, Swiss, Australian and 
 
 American banks, with those of the Bank of England, the Bank of 
 
 France, the Bank of Germany, the National Bank of Austria, and 
 
 the National Bank of Belgium, we shall see of how different service 
 
 the power of circulation has been to them, how small in comparison 
 
 their deposits arc to their note circulations. After the instances 
 
 which have been given of the progress of banking iu Sweden, and 
 
 in Switzerland, it cannot be asserted that deposit banking cannot 
 
 be expected to attain any considerable proportion on the continent 
 
 of Europe. What I believe to be the case is that the privilege of 
 
 issue, though of vast service in the hands of banks which issue 
 
 notes for business purposes, in the way of enabling them to attract 
 
 deposits, is of little or no service in this direction when in the 
 
 hands of Government or State banks. Even in the case of the 
 
 Bank of England itself when the strictly private deposits are 
 
 separated from the general mass of deposits, when those belonging 
 
 to the Government and to the London bankers are deducted from 
 
 the total [Table I.,] it will be seen that the progress of the Bank 
 
 of England, in the way of attracting deposits, has proportionately 
 
 been far less than that of the provincial and joint stock banks, 
 
 as shown in the evidence to the Committee of the House of 
 
 Commons on banks of issue. 
 
90 MK. B. H. LNGL1S PALGRAYE, 
 
 X. — Legislation in this Country respecting Circulation. 
 
 Having therefore investigated, as completely as the means at 
 our disposal will allow, the position of banking deposits in those 
 countries in which a note circulation is connected with business 
 transactions, and in those in which the note circulation is in 
 the hands of state banks, or a bank under state control, and 
 pointed out that in the one case the circulation assists the growth 
 of deposits, while in the other it is powerless to do so, it will be 
 needful, in order to make any investigation into this subject at 
 all complete, to give some description of the position of the note 
 circulation of the country at this time, and refer back for that 
 purpose to the date of Sir Eobert Peel's Acts of 18 44 — 1845, for 
 the regulations of the note circulation. Eefore that time the 
 power of issuing promissory notes payable on demand, had been a 
 right at common law, unrestricted as to the amount which might 
 be put into circulation by any banker. Ey the Acts which Sir 
 E. Peel was instrumental in passing, this power was taken away, 
 and the right of issue was confined to those banks which were in 
 possession of it at that time. It is not needful here to discuss at 
 any great length the details of those Acts. The most important 
 points in them arc the following : — 
 
 In England, any private bank of issue, that is to say any bank 
 issuing notes and having not more than six partners, was allowed 
 to join any other private bank of issue, and the amalgamated 
 banks were permitted to continue their united issues. Eut when 
 a joint-stock bank of issue in Engand amalgamated with any other 
 bank of issue, whether private or joint-stock, the right of issuing 
 notes was restricted to the limit allowed to the joint-stock bank 
 which continued the business. Under these provisions of the Act, 
 when any joint-stock bank of issue joined either a private bank of 
 issue or a joint-stock bank of issue, the circulation of the bank 
 which was amalgamated lapsed. In a similar way when an issuing 
 oint-stock bank joined a non-issuing joint-stock bank, the circula- 
 tion also lapsed. These provisions in the Act of 1844 show the 
 
ox NOTE CTBCTJLATION FN THE CONDUCT OF BANKING BUSINESS. 91 
 
 intentions of Sir Robert Peel in his legislation; he desired the 
 gradual extinction of the provincial note circulation. The more 
 favourable terms allowed to private than to joint-stock banks 
 doubtless mark that it was needful to conciliate opposition in 
 parliament. The same reason caused more favourable terms still 
 to be allowed to the issuing banks in Scotland and Ireland. In 
 both these countries all the issuing banks at the date when the 
 Act was passed, were joint-stock banks, and in Scotland and Ire- 
 land any joint-stock bank of issue was permitted by the Acts o 
 1845, to amalgamate with any other joint-stock bank of issue 
 without suffering the loss of any part of the united circulations 
 A power of issuing notes to an unlimited extent provided gold was 
 held against the excess issue, was also conceded to the banks in 
 those countries. A somewhat similar power was granted to the 
 Bank of England. The issue department of the Bank was com- 
 pelled to hold gold against every note issued beyond a certain 
 amount of securities fixed in 1844 at £14,000,000, and afterwards 
 extended in accordance with the provisions of the Act referring to 
 lapsed issues in England to £15,000,000. These provisions of the 
 Act permitting an extension of the issue of the notes of the Bank 
 of England against securities, in case of the laj)se of a provincial 
 issue, extend only to England, thus for instance when the Western 
 Bank of Scotland failed in 1857 with an authorised issue of 
 £337,938, no corresponding extension of the fixed issue was 
 allowed to the Bank of England. 
 
 XL — The Paper Circulation, the 3/ctaUic Circulation, and the 
 General Business of the Country. 
 
 The theory on which Sir E. Peel's legislation was founded was 
 that it was desirable that a paper circulation should vary in 
 amount exactly as a metallic circulation would do. In practice, 
 the provisions of the Acts of 1845, regulating the circulation of 
 notes in Scotland and Ireland, have probably enabled the banks in 
 those countries to issue as many notes as they would have done 
 
92 MB. R. H. INGLIS PALGRAYE, 
 
 had their circulation been entirely unrestricted. In England the 
 provincial banks, taken as a body, could undoubtedly issue many 
 more of their own notes than they do at present. English issuing 
 banks now obtain the notes which they require from the Bank of 
 England ; and English issuing banks, when they require notes 
 beyond the limit fixed in 1844, also obtain notes in the same 
 manner from the Bank of England. It is probable, therefore, 
 that the circulation of notes in England corresponds, under the 
 existing enactments, with considerable exactness with the amount 
 which would be put into circulation were the rights of issuing notes 
 limited only by the necessity of paying them in gold, and by the 
 present prohibition of notes of a lower denomination than £5. If 
 the circulation were thrown open to all banks, but restricted as at 
 present to notes of £5 and upwards, there would doubtless be a 
 change in the constitution of the circulation, fewer notes of the 
 Bank of England being employed and more of the other banks, but 
 it is not likely that any very considerable extension of the amount 
 of notes in circulation would follow. 
 
 Having thus explained the general plan under which the note 
 circulation of the country is regulated, it is desirable to proceed to 
 some details of its course since the date of Sir Eobert Peel's Acts. 
 The following table [Table M.] explains the main facts. It con- 
 tains a statement of the declared values of the exports and imports 
 of the United Kingdom ; of the amounts passed through the London 
 Clearing House, and of the total circulation in bank notes for the 
 year 1844, and for the years from 18G8 to 1876. The declared 
 values of the exports and imports, and the amounts passed through 
 the London Clearing House, are contrasted in this table with the 
 total of the note circulation ; as they afford, taken collectively, as 
 good a criterion as can be supplied at the present time of the state 
 of the trade and commerce of the country. The broad facts, as 
 shown by this comparison, are that while the exports and imports 
 are more than four times the amount they were in 1844, and the 
 sums passed the London Clearing House have increased in a very 
 
OS NOTE (II. i il \1'Im\ i\ rui; CONDUCT OF BANKING BU8INES8. 93 
 
 similar proportion, the increase in the note circulation has been 
 
 oompaiatively small. The value of the imports and exports has 
 expended {rem about £114,000,000 to £574,000,000. The 
 circulation has increased from about £37,000,000 to £46,000,000. 
 Meanwhile, the amounts held by the banks on deposit have greatly 
 increased. The altered course of trade, the habit of keeping bank- 
 ing accounts, and the extended use of checks, have prevented the 
 amount of the note circulation keeping pace with the increased 
 resources paid by the banks in England. The amount of the note 
 circulation of a bank is not dependent in any way on the amount 
 of deposits it holds. 
 
 While the trade and the resources of the United Kingdom 
 generally have largely increased, the amount of the gold in circula- 
 tion has also greatly increased. Any statement of the amount of 
 the gold in circulation in a country must of necessity be in the 
 form of an estimate. The investigation made in 1868 by Professor 
 Jevons was so careful and complete that it may be accepted with 
 great confidence as a basis of comparison. The information as to 
 the earlier periods is by no means so exact. In Marshall's 
 '•Digest" it is stated that the Bank of England held in coin and 
 
 bullion together on 
 
 28th February, 1819 £4,184,620 
 
 31st August „ 3,595,360 
 
 It is difficult to believe that the gold circulation in the United 
 Kingdom at that date exceeded, if indeed it reached, £10,000,000. 
 In 1844 the gold circulation was estimated by Mr. Newmarch as 
 £36,000,000. The amount of gold bullion held by the Bank of 
 England can hardly be placed at above £8,000,000 at that date. 
 The gold circulation in England in 1868 was estimated by Professor 
 
 Jevons as 
 
 68,000,000 in sovereigns 
 12,000,000 ,, half-sovereigns 
 
 80,000,000 
 
 15,000,000 gold bullion held by the Bank of England 
 
 95,000,000 
 
94 ME. R. H. INGLIS PALGRAYE, 
 
 Mr. Hendriks, who gave evidence before the French Enquete sur la 
 Question Monetaire of 1870, and is a very competent authority, 
 estimated the gold in circulation in 1875 as £100,000,000 — to 
 this, also, must be added the amount of bullion held by the Bank 
 of England. Assuming this to be £15,000,000, it becomes clear 
 that the proportion borne by the notes in circulation in the country, 
 both to the gold in circulation and the banking deposits, is far 
 smaller now than any previous time in the commercial history of 
 the country. 
 
 The proportion of the circulation which is not issued against 
 gold is also considerably smaller at the present time than it has 
 previous^ been. 
 
 In 1844 the proportion of the circulation issued against gold was 
 17 per cent. In 1876, this proportion had, under the influence of 
 the Act of 1844, risen to 37 per cent. It, must not, however, be 
 supposed from this statement that the proportion of the note 
 circulation secured by gold being held against it, had increased in a 
 similar manner as the proportions issued against gold. The gold 
 held by the Scotch and Irish banks against their excess issues is 
 distinctly marked out under the provisions of the Acts of 1845 as 
 being held against their total liabilities, and not against their note 
 circulation only. 
 
 The Acts of 1845 require that gold should be held against the 
 amount of notes in circulation beyond the fixed limit, both in 
 Scotland and Ireland. This provision of the Act, however, was 
 not intended to provide any security whatever for the holder of the 
 note. 
 
 " We do not propose," to quote Sir Robert Peel's words, " that 
 there should be any certain amount of deposit as a security." The 
 arrangement was made by Sir Robert Peel to carry out the theory, 
 that a paper circulation should vary in .amount exactly as a metallic 
 circulation would do. Hence, Sir Robert Peel directed that when 
 an extra issue of notes was put into circulation by a Scotch bank, 
 it should be bound to withdraw from circulation an equal value in 
 
ON NOTE CIRCULATION IN THE CONDUCT OF BANKING BUSINESS. 9o 
 
 sovereigns. It is possible that Sir Robert Peel may have expected 
 that this sum would be really withdrawn from active circulation. 
 The practical result lias been, however, a regular and periodic 
 demand on the Rank of England for gold, to meet the requirements 
 of the Acts of 18 45, which is sufficient to affect the money market 
 when it is in a sensitive condition. This point will be referred to 
 further on. 
 
 XII. — The question whether the Issue of Notes is a prerogative of 
 
 the State. 
 
 "While considering this portion of the subject, it is desirable to 
 refer to the theory that the functions or business of creating 
 promissory notes payable to bearer on demand is an indefeasible 
 prerogative of the Sovereign or State. 
 
 The late Mr. T. Tooke examines into the grounds on which this 
 theory is based, with great care. His opinion on the subject 
 carries great and deserved weight with it, and it is therefore quoted 
 here. 
 
 "The dogma — that it is the exclusive province of the Govern- 
 ment to create and issue bank notes — proceeds on the ground, — 
 that inasmuch as the coining and issue of metallic money is an 
 attribute, or province, or privilege of the State, so also bank notes, 
 being by the definition of the school, held to be money, the 
 creation and issue of them ought, by parity of reasoning, to be 
 considered as coming within the province of the Government. 
 
 "Now for this assumption there is not the shadow of a 
 foundation. 
 
 " There is not, in reality, any analogy between the two functions. 
 The province or function of the Government in regard to the 
 coinage as conducted by the Mint, in obedience to the prescribed 
 regulations, is simply to certify by a stamp, bearing the effigy of 
 the Sovereign, the weight and fineness of the piece of metal to 
 which it is applied. This stamp or certificate is essential to the 
 currency of the coin, and it is accordingly guarded by severe 
 penalties. 
 
96 ttfi. li. IT. IXGLIS PALGEAVE, 
 
 11 But no profit or benefit in a pecuniary or other form is derived 
 by the Government from the exercise of this function ; or, as it has 
 sometimes been miscalled, privilege ; for the exercise of a privilege 
 supposes advantages of some kind. So far from it, indeed that in 
 the case of the gold coin — which alone is here in question— the 
 beautiful coinage or manufacture is attended with loss to the 
 Government. It is an onerous duty imposed on the State for the 
 convenience of the public, and the function of Government is con- 
 fined to the coinage or stamping. It does not issue the coin in any 
 proper sense of the word, issue. The gold is delivered into the 
 Mint by the Bank of England, or by other banks, or by individuals, 
 who desire to have a quantity of the metal converted into coin ; an 
 equal weight of which is, after the delay of five or six weeks, re- 
 delivered to the parties who deposited the metal in its unstamped 
 state. The delay incidental to the process of coinage is considered 
 to be equivalent to l|-d. per ounce. Importers, therefore, and 
 other holders of unmanufactured [gold, find it their interest and 
 convenience to sell the gold to the Bank at £3 17s. 9d. the ounce, 
 and to receive in immediate payment coin or bank notes at their 
 option, of the current value of £3 17s. lOid. the ounce. The 
 Bank of England is, accordingly, the principal channel through 
 which the coin is received from the Mint and issued to the public. 
 
 " How then can it, by the most strained construction, be said 
 that this function of the Government in the coinage of gold, 
 leaving as it does to others the issue of the gold so coined, bear 
 any similitude to the creation, or, as it is termed, the coinage, 
 and the issue of paper money in the shape of bank notes ? The 
 Government has undoubtedly the power of taking into its own 
 hands the creation and issue of bank notes ; but it would be for 
 purposes, and attended with consequences, totally different from 
 those which render the Mint regulations a province of the 
 Government. 
 
 " The main purpose for which some of the Governments of the 
 Continent of Europe have assumed and exercised the exclusive 
 
OH NOTE CNUT/L.VTIOX TX THE CONDUCT OF BANKING BUSINESS. i>7 
 
 privilege of the issue of hank notes has been that of the profit to 
 he derived from it ; and a flagrant abuse in the way of fraud has 
 been in many signal instances the consequence. 
 
 " And of still more importance to Governments, disposed to 
 make an illicit gain at the expense of their subjects, has beeu the 
 exclusive privilege of the issue of what is termed paper money of 
 compulsory tender, and not returnable for payment to the issuing 
 bank." " Tooke on the Bank Charter Act of 1844," page 35. 
 
 Sir 11. Peel himself disclaimed this theory ; in his speech of 
 May 6, 184 4, he referred to this subject and quoted Lord Althorp's 
 opinion on it. 
 
 " This question," Sir R. Peel said, " was under the considera- 
 tion of the House when Lord Althorp brought forward the Bank 
 Charter Bill, in 1832 ; and Lord Althorp, in moving the extension 
 of the Bank Charter, discussed the policy of a single bank of issue 
 to be constituted by and responsible to the Government. Having 
 mentioned the name of Lord Althorp, I must, though I differ from 
 that noble lord in respect to politics, bear testimony to his 
 integrity, and to the soundness of his judgment in all financial 
 matters. Xo man who ever filled the office which the noble lord 
 then held is entitled to stand higher in public estimation as 
 respects those qualifications for a public trust. On the occasion 
 to which I have just referred, Lord Althorp said : — 
 
 " ' Another point for consideration is, whether the profits, which 
 must necessarily be derived from the circulating medium of the 
 country, should be possessed by Government, or should be allowed 
 to remain in private hands ? Xow, sir, the advantages, the only 
 advantages, which I have been enabled to discover in a Govern- 
 ment bank, as compared with a private company, arc those which 
 result from having responsible persons to manage the concern, the 
 public deriving the benefit of it ; but then, on the other hand, I 
 think these advantages are much more than counterbalanced by 
 the political evils which would inevitably result from placing this 
 bank under the control of the Government. I think that the 
 
98 ME. E. H. IXGLIS PALGEAVE, 
 
 effect of the State having the complete control of the circulating 
 medium in its own hands would be most mischievous. Under 
 these circumstances, sir, I certainly am prepared to propose the 
 continuation of a single bank of issue in the metropolis, subject to 
 the control of the publicity of their accounts. If we were now, 
 for the first time, establishing a system of banking on which the 
 country should proceed, I think this would be the most advisable 
 mode of establishing a bank in the metropolis. But, sir, this 
 proposition has the additional advantage — and it is no mean one — 
 that it will occasion the least change ; because I certainly am of 
 opinion that, unless some great advantages could be derived from 
 a change in the monetary system of this country, nothing could be 
 more ill-advised — nothing could be more useless, than to depart 
 from it.'" 
 
 " In the latter part of Lord Althorp's observations I entirely 
 agree. The true policy in this country is to work, so far as it be 
 possible, with the instruments you have ready for your hand — 
 to avail yourselves of that advantage which they possess from 
 having been in use, from being familiar from constituting a part 
 of the habits and usages of society. They will probably work 
 more smoothly than perfectly novel instruments of greater 
 theoretical perfection. If we disturb that which is established, 
 let us have some good practical reason for the change." 
 
 Having thus referred to the main points in which the note 
 circulation touches the business of the country and taken a cursory 
 glance of some of the opinions expressed in 1 844, it remains to 
 make some remarks on some of the results which have followed on 
 Sir It. Peel's legislation. 
 
 XIII. — The Course of the Note circulation in this country since the 
 
 Actofl8U. 
 
 The annual average issues of the English Provincial Banks have 
 declined from £8,170,000 in 1844, to £4,704,950 in 1876. The 
 circulation of the Bank of England has increased to a greater ex- 
 
OX NOTE CIRCULATION IX THE CONDUCT OF BANKING BUSINESS. 00 
 
 tent than the decline in the circulation of the private and joint- 
 stock banks ; while the annual average circulation of the bank in 
 1844 was £'20.200,000 it had risen in 1875 to £27,346,000. A 
 very considerable part of this increase was in the notes issued by the 
 branches of the Bank of Euglaud. The provincial circulation of 
 the Bank has increased more rapidly than the metropolitan. The 
 provincial note circulation of the bank, which in 1844, was 
 £6,500,000, had risen, in 1875, to £10,383,000, while the 
 metropolitan circulation at the earlier date was £13,700,000, and 
 at the later £16,936,000. Beyond question also many notes which 
 are included in the metropolitan returns and are dated from 
 London are really issued in the provinces, as many banks in the 
 country which issue Bank of England notes obtain them from 
 London ; hence a considerable proportion of the circulation of the 
 Bank which is dated from London is really due to provincial 
 requirements. Meanwhile the circulation of notes both in Scot- 
 land and Ireland has increased. 
 
 The circulation in Scotland in 1844 was £3,020,000, and 
 £6,098,000 in 1876. 
 
 The circulation in Ireland was £5,940,000 in 1845, and 
 £7,064,000 in 1870. The course of the Scotch note circulation 
 has been almost uniformly progressive. That in Ireland has 
 fluctuated considerably. In some \ears it has increased and at 
 other times it has declined. Thus in the year 1872, the highest 
 point reached, the average yearly note circulation was £7,674,000, 
 and in 1849 £4,310,000. There appears to be a greater circula- 
 tion in gold in Ireland than in Scotland. 
 
 The arrangements in the Acts of 1844-1845, which have tended 
 to centralize the note circulation of England on the Bank of 
 England and to connect the provincial circulation of Scotland and 
 Ireland with the Bank reserve have been described. It now 
 remains to trace whether these circumstances have produced any 
 influence on the rate of interest charged by the Bank. 
 
100 ME. R. II. IXGLIS PALGRAVE, 
 
 XIY.— The Rate of Discount from 1825 to 18 U- 
 
 In continuing this investigation into the connection of the note 
 circulation with the business of the country, it now becomes 
 desirable to examine into the rate of interest charged for the loan 
 of money, and to ascertain whether the manner in which the note 
 circulation is regulated has, or has not, any influence on it. This 
 is the best test which can be applied as to whether such is the 
 case or not. If any influence whatever has been exerted we shall 
 find it reflected in the value of money. In order to conduct this 
 investigation on a proper footing it obviously becomes necessary to 
 institute an enquiry into the rate of interest charged both before 
 the Bank Acts of 1844-5 came into operation, and since that time. 
 It thus becomes necessary to extend our enquiry at least over a 
 period of fifty years, and to investigate the rate of interest charged 
 during the twenty years immediately before the Bank Acts came 
 into force, 1825-1844, and for the thirty-two years, 1845-1876. 
 And as while examining these figures it is desirable not to lose 
 sight of the principal commercial events which have influenced 
 the money market during that time, a short statement of the 
 leading points has been added, as it will aid us in making the pre- 
 sent enquiry. During the long continental wars which occupied 
 the earlier years of this century, the Bank Restriction Act which 
 suspended payments in specie, was in force. In 1819 Sir Robert 
 Peel passed his well-known Act directing the gradual resumption 
 of specie payments. Under the provisions of this law bank notes 
 were to be paid in bullion according to a kind of sliding scale for a 
 certain period, after which they were to be paid in coin. The Act, 
 in order to give the Bank of England time to make due preparation 
 for so important an operation as the substitution of a metallic for a 
 paper currency in so large a country as this, though passed in 1819, 
 was not to come into force till February, 1820. From that date 
 till October, 1820, bank notes were to be paid in bullion, if the 
 holders required it, at the rate of £4 1 s. per ounce. From October, 
 1820, to May, 1821, the price was to be £3 19s. 6d. per ounce, 
 
OX NOTE CIRCULATION IX THE CONDUCT OF BANKING BUSINESS. 101 
 
 also payable in bullion; from May, 1821, to May, 1823, notes 
 were still to be paid in bullion, but at the Mint price, £3 17s. lOM. 
 per ounce; and from May, 1823, all engagements were to be met 
 in the gold coin of the realm. These were the requirements of the 
 Art of 1819, which thus allowed four years for the completion of 
 the operation. The Bank of Englaud, however, through good 
 management, was able to anticipate these dates, and on May 1st, 
 1821, two years before the limit allowed had expired, was able to 
 provide coin to meet all demands. The coin and bullion held by 
 the bank in 1819 was about 4 millions, and in 1821 about 12 
 millions. This was considered a large amount at that time. It 
 diminished in 18'22 to about 10 millions, yet, by 1824 it had risen 
 to nearly 14 millions, a larger sum than any recorded till nearly 
 twenty years later, when, in 1844, the bullion held by the Bank of 
 England reached the then unprecedented amount of 16 millions. 
 Thus, during the twenty years at present immediately under our 
 consideration, from 1825 to 1844, the bullion held by the bank 
 became largely augmented in amount. 
 
 The year 1825 marked the culminating point in the period of 
 speculation and excitement which had commenced in 1824. A 
 spirit of speculation in produce and in goods of nearly all descrip- 
 tions showed itself in the course of that year. The cause of this 
 speculation is assigned by Mr. Tooke, in his well known work on 
 the " History of Prices," to a belief that the stock in hand of 
 several important articles of consumption was short of what it had 
 usually been. Aud when once a spirit of speculation was started 
 it rapidly extended itself till, as Mr. Tooke remarks, there " arose 
 an impression that all purchases of goods were likely to answer." 
 "When once such an idea had got hold of the minds of men in trade, 
 it was likely to produce for a time higher prices still. The spirit 
 of speculation was fostered by very sanguine reports of enormous 
 results which were to be obtained from South American mines, 
 principally from mines of the precious metals. 
 
 For a time, as is usual in periods of great speculative activity, 
 

 102 ME. E. H. IXGLIS 2ALGRA.TE, 
 
 everytliing seemed to promise well. It was expected that 
 the exports of British produce to South America would imme- 
 diately aud rapidly increase. Meanwhile these opinions received 
 some support from circumstances which are curiously jDarallel to 
 those under which British trade expanded with " leaps and bounds" 
 during the years 1870 — 1873. It is best to describe what occurred 
 in the words of Mr. Tooke. " At the same time (1824), indepen- 
 dent of these anticipations, the remittances to South America of 
 the very capital for the mining projects then afloat, as also for the 
 loans raised in this country for those States, were made, in large 
 part, in manufactures, besides mere stores and machinery ; thus 
 forming a great temporary increase of demand for manufactures. 
 It is worth while to look back to a statement of what occurred at 
 that time, as it shows how such a state of things has a tendency to 
 repeat itself. The following extract from the Annual Register for 
 1824 gives a very detailed and correct account of the state of 
 things of that year, arising out of the disposition, on the part of the 
 public, to enter into new schemes for the employment of capital : — 
 " The abundance of capital led to the formation of numerous 
 joint-stock companies, directed, some of them, towards schemes of 
 internal industry ; others of them, towards speculations in distant 
 countries. The mines of Mexico was a phrase which suggested to 
 every imagination unbounded wealth ; and these companies — the 
 Heal del Monte Association, the United Mexican, and the Anglo- 
 Mexican — were formed for the purpose of extracting wealth from 
 their bowels by English capital, machinery, and skill. Similar 
 companies were formed in the course of the year for working the 
 mines of Chili, of Brazil, of Peru, and of the provinces of the Rio 
 de la Plata, and for prosecuting the pearl fishery on the coast of 
 Columbia. So great was the rage for speculation, that, in the 
 course of a very few weeks, in the early part of the year, the 
 following undertakings, among others, were brought forward in 
 London, and found subscriptions courting their acceptance : — The 
 Alliance Fire and Life Insurance Company, with a capital of four 
 
ON NOTE CIRCULATION IN TUP] CONDUCT OF BANKING BUSINESS. 103 
 
 millions ; The Palladium Fire and Life Insurance Company, with a 
 capital of two millions ; The British Annuity Company, whose 
 capital was three millions ; The Metropolitan Investment Company, 
 with a capital of one million ; The Thames and Isis Navigation 
 Company, with a capital of one hundred and twenty thousand 
 pounds ; an Ale Brewery Association, with a capital of two hundred 
 thousand pounds ; a Company for obtaining from Government a 
 Grant of a Million of acres of Land in New South AVales, and for 
 improving the Growth of Wool ; an Association for the cutting a 
 Canal across the Isthmus of Darien ; a Company for Navigating the 
 Thames and Isis by Steam ; a new Dock Company for Coals only. 
 Many of the Companies which were thus set on foot were able, or 
 conceived that they were able, to prosecute their objects effectually 
 without deriving any sanction or special powers from the legisla- 
 ture. Others of them, aud particularly such as were to have their 
 sphere of operation at heme, found it prudent or necessary to apply 
 for private Acts of Parliament, so that in the month of March there 
 were upwards of thirty Bills before the House of Commons for the 
 purpose of giving legal existence to different companies of this 
 kind. In all these speculations only a small instalment, seldom 
 exceeding 5 per cent., was paid at first, so that a very model ate 
 rise on the prices of the shares produced a large profit on the sum 
 actually invested. If, for instance, shares of £100, on which £5 
 had been paid, rose to a premium of £40, this yielded on every 
 share a profit equal to eight times the amount of the money which 
 had been paid. This possibility) of enormous profit by risking a 
 small sum, was a bait too tempting to be resisted ; all the gambling 
 propensities of human nature were constantly solicited into action, 
 and crowds of individuals of every description — the credulous and 
 the suspicious — the crafty and the bold — the raw and the expe- 
 rienced — the intelligent and the ignorant — princes, nobles, politi- 
 cians, placemen, patriots, lawyers, physicians, divines, philosophers, 
 poets, intermingled with women of all ranks and degrees — spinsters, 
 wives, and widows — hastened to venture some portion of their 
 
 H 
 
104 ME. E. H. IXTGLIS PALGEAVE, 
 
 property in schemes of which scarcely anything was known except 
 the name."—" Tooke's History of Prices," Vol. II., p. 50. 
 
 Thus, as in more recent years, one cause reacted on another. 
 Meanwhile speculation in foreign loans, which were largely to the 
 South American States, in mining and other companies, continued, 
 till the whole inflation reached its highest point in the spring of 
 1825. The crisis of 1825 was scarcely less severe than that of 
 1866, if we take into account the position of business in England 
 at that time. It took some time for its effect to wear off, but by 
 1827 business, generally speaking, had resumed its ordinary 
 course. The exports, which, had dropped from 38 millions in 1825 
 to 31 millions in 1826 rose again to nearly 37 millions in 1827. 
 The fluctuations in the amount of the exports between 1827 and 
 1833 were but small; in that year the amount was 39 millions. 
 From 1833 a rapid augmentation commenced, the values being 
 41 millions in 1834, 47 millions in 1835, 53 millions in 1836. 
 But the commercial pressure in the autumn and winter of that 
 year arrested the progress of all descriptions of business. The 
 value of our exports dropped to 42 millions in 1837, and though a 
 recovery took place the next year, still, between the years 1838 
 and 1841, the exports did not rise to the level of 1836. In 1841 
 trade generally was much depressed. Want of employment and 
 general distress led in the next year to disturbances in the manu- 
 facturing districts. This state of affairs was reflected in the 
 amount of the exports, which in 1842 sank to 47 millions. From 
 that date matters began to improve, and in 1844, the last year 
 which is under our immediate notice, the exports were valued 
 at 60 millions, a larger sum than any which had previously 
 been registered. 
 
 This short summary of the principal events affecting the trade 
 of the country during the twenty years, 1825 to 1844, is given, as 
 it is needful to bear in mind some of the main facts of commercial 
 history during that period, in order to explain the variations in the 
 statement of the rate of discount current at the time. To put it 
 
ON NOTE CIH< II.\T1"N IN THE CONDUCT OF BANKING BUSINESS. 105 
 
 in the clearest manner, we find that the exports, which in 1825 
 were 38 millions, had expanded to 60 millions in 1844, and the 
 progress of the country in other directions had been at least as 
 great. The country at the commencement of the 20 years under 
 our consideration was only just commencing to recover from the 
 vast strain of the great continental war which was the cause of so 
 much misery during the early years of this centuiy. In 1825 the 
 currency had been but recently brought back from a paper to a 
 gold circulation, and the year itself was one of speculation and 
 panic; in 1844 the country was quiet and prosperous, and 
 our trade was on the eve of that period of expansion and prosperity 
 which, though chequered with occasional reverses, has continued 
 to extend itself till quite recent times. 
 
 It is a remarkable thing that the average rate for the whole 
 twenty years is distinctly lower than that of the thirty subsequent 
 years. Thus, the average rate for the years 1825-1844 was £3 
 lis. 10d., and for the years 1845-1874, £3 18s. 5d. The increase 
 of banking capital and of loanable capital during the latter period 
 had been very great, but the increase in the demand for money 
 must have been greater still in recent years. And during the 
 earlier period it certainly does not appear that there was anything 
 like that rapid intercommunication between the great monetary 
 centres of the world which exists at the present time. Hence 
 though considerable fluctuations in the rate of discount may be found 
 in the table at the end of this paper, they are far from being as in- 
 tense as those which have occurred since. [Table P.]. If we divide 
 the twenty years into four periods of five years each, we shall find 
 the fluctuations in the yearly averages greater in the two later 
 than in the two earlier divisions. Even the crisis of 1825 only 
 raised the average rate for the next year, in which the pressure 
 was principally felt, to £4 10s. The probable explanation of this 
 is that at the earlier dates the business of the country was not only 
 on a smaller scale, but was carried on more independently of 
 banking facilities than at the later periods. Business in England 
 
106 MR. R. H. 1NGLIS PALGRAVE, 
 
 then probably approached more closely to its condition in France 
 now. In France, even at the present day, keeping accounts with 
 bankers for the purpose of drawing cheques upon them is compara- 
 tively a modern custom, and cannot still be said to be general. 
 Large payments are still frequently made in bank notes and specie. 
 Something similar to this probably was the state of English 
 business fifty years ago. If we compare the amount of the circula- 
 tion of the Bank of England then with the amount at the present 
 date, it is clear that it must have borne then a far larger proportion 
 to the general business of the country than it does at the present 
 time. A table of British exports and imports for the years 1825- 
 1844 is added. [Table K.] By examining this, and by comparing 
 it with the amounts at the present time, we are reminded of the 
 vast difference in the extent of business between those times and 
 the present. Yet, great as the extension in our trade has been, 
 the extension in the banking resources of the country has been even 
 greater. "With a greater amount of banking capital we might have 
 expected greater evenness in the rate of interest. But when we 
 compare the rate of discount during the twenty years from 1825 
 to 1844 with the rate between 1845 and 1874, we find far larger 
 and sharper fluctuations in the later period. The general cause 
 of these increased fluctuations is not before us at the present time, 
 but in looking over the summary table [Table P.], which collects 
 the average rate month by month, for the ten years from 1825 to 
 1834, and from 1835 to 1844, we shall see that in the first decade 
 the months in which the rate rises highest above the figure 100, 
 which represents the average value for the period under con- 
 sideration, are those of January, November, and December — in the 
 later decade (1835 to 1844) the same months, with the addition of 
 October. This appears to show the influence of a force which we 
 are familiar with — a greater business activity in the winter months 
 which follows the completion of the harvest, taking the harvest in 
 its widest agricultural sense — of corn, cotton, and everything 
 which reaches our shores or is stored within them when the great 
 
ON NOTE CIRCULATION IN THE CONDUCT OF BANKING BUSINESS. 107 
 
 labours of the agricultural year arc over. We will now pass on to 
 the consideration of the period from 18-15 to 187-1, and endeavour 
 to ascertain whether the influence of the same causes, or others, or 
 both combined, can be traced in this period also. 
 
 XV.— The Bate of Interest from 18^5 to 1876. 
 
 The year which immediately followed the passing of the Bank 
 Act, was like those which had preceded it, very favourable to the 
 introduction and the successful working of that measure. In 1845, 
 however (a period of great speculation) activity set in. The fol- 
 lowing statement from a very able paper read by Mr. Danson 
 before a meeting of the Statistical Society in January, 1847, puts 
 the main facts very clearly before us. 
 
 "Between March and September, 1845, joint-stock speculations, 
 for the immediate investment of capital, were set on foot, involving 
 a larger aggregate amount than had ever before been so involved in 
 this country. The amount to raise which, for railways alone, the 
 sanction of Parliament was actually applied for in the following 
 session, exceeded £340,000,000 sterling; and if we include all the 
 new schemes in which scrip or letters of allotment were actually 
 selling at a premium in July, August, and September, 1845, the 
 amount cannot be estimated at less than £500,000,000. 
 
 At first this extraordinary activity produced very little effect on 
 the money market; throughout the year 1845 the Bank rate con- 
 tinued low, averaging only £2 Los. 5d. per cent. In 1846 it 
 averaged £3 6s. 7d. per cent. By April, 1847, however, it had 
 risen to 5 per cent, in the last three weeks of that month, and the 
 first few days of May a very severe pressure took place. This had, 
 however, passed off by the end of May, and though the rate of 
 interest still remained high, owing to the continued demand for 
 money connected with the railways in course of construction, no 
 immediate apprehension was felt. The heavy failures commencing 
 in the corn trade in August, and the stoppage of the Royal Bank 
 of Liverpool in October, brought on a panic. The Bank rate rose 
 
108 MR. R. H. INGLIS PALGRAVE, 
 
 to 8 per cent., and the reserve dropped to £1,600,000 on October 
 30th. The high state of tension in 1847 was followed by a long 
 period of depression, the Bank rate dropped to an average of 
 £3 14s. 8d. per cent, in 1848; £2 19s. Od. per cent, in 1849, 
 and of £2 10s. Od. per cent, in 1850 ; a slight rally to an average 
 of 3 per cent, took place in 1851. The French Government at this 
 time were coining gold rapidly, desiring to substitute a gold for a 
 silver coinage. This appears to have counteracted for a time the 
 influence of the discovery of gold in New South "Wales announced 
 in September, 1851. Lower rates of discount followed in 1852. 
 On the 24th April of that year the rate fell to 2 per cent, and con- 
 tinued at that point till January 8th, 1853, a longer period of 
 extreme depression than any that has been experienced till the 
 similar period which commenced on April 19th, 1876. In 1853 a 
 gradual revival of trade commenced — the long period of a low rate 
 of interest had, however, stimulated unsound business — and a con- 
 siderable number of mercantile failures took place in the spring of 
 1854. The war with Russia assisted in increasing the demand for 
 money, and the average rate for the year was £5 2s. 3d. per cent. 
 Commercial activity became in some degree checked by the con- 
 tinuance of hostilities, and a rather lower rate prevailed on the 
 average during 1855, though in the antumn of that year very high 
 rates were charged. Throughout 1856 the rate of discount was 
 high, being 6 per cent, in May, 6A- and 7 in October and Novem- 
 ber. But this was only a prelude to a greater rise in 1857. The 
 Bank rate in that year never fell below 5£, and in the November 
 during the panic of that year, a 10 per cent, rate was reached, and 
 the Bank Act of 1844 was suspended. Toward the end of 1857 
 the state of tension gradually diminished, and by February, 1858, 
 3 per cent, was reached. The average rate for 1859 was lower 
 still, only £2 14s. 9d. per cent. In 1860 the Commercial Treaty 
 with France was negociated. A deficient harvest tended to the 
 raising the bank rate in the autumn, but the average rate for the 
 vear was only £4 3s. 8d. In 1861 a considerable rise took place. 
 
ON NOTE CIRCULATION IN THE CONDUCT OE BANKING BUSINESS. 109 
 
 Gold -was exported, to a considerable extent, both to France and 
 America, and the average rate for the year was £5 5s. 4d. per 
 cent., which was followed in the next year, 18G2, partly under the 
 influence of the depression caused by the civil war in America, by 
 a drop to an average of £2 10s. 7d. per cent. The diminished 
 supply of cotton produced for the time great distress in the manu- 
 facturing districts. 1863 opened with a demand for gold. Several 
 new loans were brought out, higher prices prevailed, and the 
 average Bank rate for the year was £4 8s. lOd. per cent. But 
 far higher rates prevailed in 1864. Increased importation of 
 cotton had to be paid for, many new undertakings were promoted, 
 and the average Bank rate for the j'ear was £7 7s. Id. per cent., 
 the highest annual average rate ever noted. Trade continued to 
 expand and apparently to flourish in 1865, but the demand for 
 money was not so active as in the preceding year, and an average rate 
 of £4 15s. 4d. per cent., though high, yet when compared with 
 several other years appeared as nothing very extraordinary. The 
 events of 1866 are still so recent that there is scarcely any need to 
 go into any considerable amount of detail. The over-specula- 
 tion of the years immediately preceding terminated in the 
 greatest collapse and consequent panic which has ever been 
 known, the failure of Overend, Gurney & Co. and of several 
 banks was accompanied by the sharpest pressure which the 
 English money market has ever known. A long period of 
 depression followed, an.d it was not till 1869 that the influence of 
 the crisis of 1866 began to wear off. 1870 commenced with a low 
 rate of interest, the Bank rate being 3 per cent, for the first half of 
 the year. The war between France and Germany, which broke 
 out in August, unsettled business, and the Bank rate rose for a time 
 to 6 per cent., though it dropped in about eight weeks to 2£. The 
 average for the whole year was £3 2s. 7d. percent., and £2 17s. 8d. 
 the next year, 1871. Both 1872 and 1873 were years of many 
 fluctuations, and the rate was greatly influenced by the German 
 demand for gold for coinage operations. The average rate for 1872 
 
110 ME. E. H. INGMS PALGRAVE, 
 
 was £4 Os. 10d., and for 1873 £4 16s. ; a gradual decline of the 
 rate commenced in 1874, and in 1875 the collapse of several 
 Foreign loans and the cessation of the payment of interest on them, 
 marked the commencement of a period which has at last produced, 
 since April 1876, the longest continuance of the lowest rate charged 
 by the Bank which has ever been recorded. Perhaps, during the 
 last three years, the Bank rate has been less distinctly an index to 
 the market rate than during the earlier portions of the period 
 under our notice ; but we shall not do wrong if on the whole we 
 take the Bank rate as the best guide we can find to the fluctuations 
 of the value of money in this country. 
 
 XVI. — The Rate of Discount from 1825 to 18J/4- an & from 
 
 7845 to 1876 compared. 
 
 The short epitome of the principal events which has been given 
 here is intended as an assistance to the memory, by recalling the 
 main facts of importance which influenced the money market. 
 They remind us of the great vicissitudes which the country has 
 gone through during the last fifty years, and that these fluctuations 
 were not confined to any one part of the year. The causes of 
 perturbation in the money market have taken place at all times and 
 at all seasons It might be expected, therefore, that on an average 
 of years an uniform rate would prevail for every portion of the 
 twelve months, as the fluctuations appear to be distributed with a 
 considerable uniformity. In order to show what the facts really 
 are, the rate of interest for each month in the year has, as men- 
 tioned before, been tabulated for the fifty-two years from 1825 to 
 1876. For the twenty years preceding the passing of the Bank 
 Act, as the Bank rate did not always coincide with the market 
 rate, a statement as to the rate of discount charged upon first-class 
 bills given in Mr. D. B. Chapman's evidence before the Select 
 Committee of the House of Commons on the Bank Acts, 1857, 
 [Table N.] has been taken as the basis of the calculation, while for 
 the thirty-two years from 1845 to 1876 the minimum rate charged 
 
ON NOTE CIRCULATION IN TUB CONDUCT OF BANKING BUSINESS. 1 1 1 
 
 by the Bank of England has been followed. The rate in these 
 tables is given month by month, and a column of proportionate 
 figures is added to each statement, to assist the reader in following 
 the fluctuations in the rate of interest. The average rate for each 
 year is placed above the individual monthly statements, and the 
 average rates for the longer periods above the tables containing the 
 statements from 1825-34, 1835-44, 1845-54, 1855-64, 1865-74, 
 and also for the summary tables from 1825-44 and from 1845-74. 
 [Tables 0., P., Q., E. and S.] The columns containing propor- 
 tional figures are all in a different type throughout, for facility of 
 reference. By examining these tables, which are drawn up on the 
 same plan throughout, the reader will be able to trace the 
 course of events in the discount market with great facility. The 
 first point to be noted is that while the average rate of discount for 
 the fifty years 1825-74 was £3 16s. 2d., it was slightly lower in 
 the twenty years from 1825-44 than in the thirty years from 
 1845-74, having averaged £3 lis. lOd. from 1825 to 1844, and 
 £3 18s. 5d. from 1845 to 1874. The next point is that the fluctua- 
 tions in the twenty years 1825 to 1844 were less violent than in 
 the 30 years 1845-1874. If we take the average rate for each 
 period as equal 100 we shall find that 
 
 Between 1825-44 the highest monthly rate . . equal 107 
 
 the lowest monthly rate . . ,, 95 
 
 Between 1845-74 the highest monthly rate . . „ 114 
 
 the lowest monthly rate . . ,, 91 
 
 And in the third place, we shall observe that the fluctuations were 
 distributed in a different manner during the two periods. Arranged 
 in order as to the maximum rate, the distribution is as follows : — 
 
112 
 
 ME. It. H. INGLIS PALGEAVE, 
 
 The pressure (month by month) in the Money Market compared during 
 
 the periods 1825-44 and 1845-74. 
 
 2nd Period 1845-74, average of 
 the same equal 100. 
 
 1st Period 1825-44, average 
 
 of 
 
 the same equal 
 
 100. 
 
 
 January 
 
 
 equal 
 
 107 
 
 December 
 
 
 >) 
 
 107 
 
 November 
 
 
 >» 
 
 105 
 
 October 
 
 
 j> 
 
 101 
 
 February- 
 
 
 >> 
 
 99 
 
 June 
 
 
 ?> 
 
 99 
 
 July 
 
 
 )> 
 
 99 
 
 September 
 
 
 j> 
 
 99 
 
 March 
 
 
 j> 
 
 97 
 
 April 
 
 
 >> 
 
 97 
 
 May 
 
 
 >> 
 
 95 
 
 August 
 
 
 >J 
 
 95 
 
 November 
 
 December 
 
 May 
 
 October 
 
 January 
 
 June 
 
 February 
 
 April 
 
 March 
 
 July 
 
 August 
 
 September 
 
 equal 
 
 114 
 
 108 
 
 104 
 
 103 
 
 102 
 
 101 
 
 100 
 
 98 
 
 97 
 
 96 
 
 95 
 
 91 
 
 In comparing these lists we shall find four months occupying 
 exactly the same relative place to each other and to the rest at 
 both periods. These are the months of 
 
 December, June, 
 
 October, March. 
 
 Four other months, though riot exactly in similar positions on 
 each list, are still so close to the same places that they may be con- 
 sidered as occupying practically the same places ; these are the 
 months of 
 
 February, July, 
 
 April, August. 
 
 "We are hence entitled to believe that as these months occupy the 
 same positions relatively to the average rate for a period of fifty 
 years, the rate charged in them is governed by the natural laws of 
 supply and demand. There remain the four months of 
 
 January, November, 
 
 September, May. 
 
 In both the first-named months the demand appears to have fallen 
 off, while in the two remaining months the demand has greatly 
 
OX NOTE CIRCULATION IX THE CONDUCT OF BANKING BUSIXESS 113 
 
 increased. "With regard to September, there has been of late years 
 a very marked diminution of business in the autumn holiday season, 
 which probably accounts for the lower rate charged in that month, 
 and January, though not standing so high in the later, as in the 
 earlier period, still stands high in the list. The alteration in the 
 relative position of the two mouths which remain, November and 
 Hay, requires attention. Both of these stand in much higher 
 positions relatively to the average of the period under consideration 
 in the later than in the former list. In the period from 1825-44 
 the rate of interest charged in November is represented by the 
 figure 105. In the period from 1845-74, by the greatly increased 
 figure 114, the average rate being represented in both cases by the 
 figure 100. The alteration in the position of the month of May is 
 still greater. In the period from 1825-44, May stands as low as 
 any month in the list, the rate of iuterest current in it being repre- 
 sented by the figure 95; but in the period from 1845-74, May is 
 the highest month but two, being represented by the figure 104. 
 
 XVII. — The influence of the Scotch demand for circulation during the 
 
 months of May and November. 
 
 The question occurs to the mind is there any natural cause to 
 occasion this enhanced demand for discount in the month of May 
 during recent years, or is there any artificial restriction which 
 weighs on the market at this season ? Then with regard to the 
 rate of interest in the month of November, no doubt the latter half 
 of the year, with all the demands for harvest work in the United 
 Kingdom, for holiday making among the easier classes, for meeting 
 the requirements occasioned by the autumnal importation of corn 
 from the United States and elsewhere, and the supplies of produce 
 of all descriptions which always come forward towards the close of 
 the summer is more heavily weighted than the earlier portion. If 
 this demand were of an international character, we might expect 
 to find it reflected in the rates of interest charged by foreign banks. 
 If we examine the rates charged by two of the most representative 
 
114 ME. E. H. INGLIS PALGEAVE, 
 
 European banks — those of France and of Prussia — we shall find 
 their rates nearly exempt from fluctuation during this particular 
 month. Between 1844 and 1875 the Bank of France has only three 
 times raised its rate in the month of May, and the Bank of Prussia 
 but four times, while the Bank of England raised its rate twenty- 
 one times. 
 
 But if we compare the rate of interest charged in November 
 during the period 1845-74 with that which ruled during the period 
 1825-44 [Table P. and S.], it will be seen that during the later 
 period the average rate in November stood not only higher in com- 
 parison with the other months of the year, but also far higher in 
 comparison with the average rate of the period. The same influence 
 again does not appear to extend to the continent. During the period 
 from 1844 to 1875 the Bank of France raised its rate of discount 
 six times during the month of November, the Bank of Prussia four 
 times while the Bank of England raised its rate fourteen times 
 during the same month. No doubt, fluctuations in the rate of 
 interest are more frequent in the rate charged by the Bank of 
 England than in the case of the two foreign banks just mentioned, 
 but the fact is nevertheless worth noting. Judging by this we 
 may consider the causes which operate thus on the rate charged by 
 the Bank of England in the months of May and November to be 
 something exceptional in their character. "Without undertaking 
 to say that they account for the whole of the pressure, the with- 
 drawals of gold from the Bank of England connected with the 
 Scotch note circulation, from the manner in which they affect the 
 reserve, appear to exercise an influence on the Bank of England 
 into the extent of which it is desirable to inquire. The Act of 1 845 
 required the excess of the Scotch note circulation over the limits 
 fixed in that year to be provided for by holding gold against it. 
 The portion of the Act of 1845 regulating this is clause 6, which 
 states that it shall not be lawful for any banker in Scotland to have 
 in circulation upon the average of a period of four weeks a larger 
 amount than the sum certified by the Commissioners of Stamps and 
 
ON NOTE CIRCULATION IN THE CONDUCT OF BANKING BUSINESS. 115 
 
 Taxes as being the authorised note issue of each hank, and the 
 monthly average amount of gold and silver coin held by such banker 
 at the head office or principal issue of such banker during the same 
 period of four weeks. The amount of gold thus held does not 
 afford, and was not designed to afford, any real security to the 
 holder of a Scotch note. 
 
 Hut this clause was designed by the late Sir K. Peel, to carry 
 out the principle that a paper currency should vary as directly as 
 a metallic currency ; therefore though, in deference to the strong 
 feeling in Scotland in favour of the local note circulation, he 
 allowed the limits which the note circulation had then attained to 
 be exceeded when required, he coupled this permission with the 
 requirement that gold should be held for the excess. Up to the 
 years 1855 and 1856 the excess of the Scotch banks over their 
 limit had not been distinctly marked. By 1860 the annual 
 average excess had become a million and a half, by 1876 more 
 than three millions, the highest points of which are in the months 
 of May and November. In 1876, both in May and November, the 
 Scotch circulation stood more than four millions above the 
 authorized issue. 
 
 The question therefore now takes this shape. How far can we 
 consider the Scotch demand occurring in this manner as exercising 
 an influence over the bank rate ? Now it will be observed that 
 the clause in the Act just cited requires the average amount 
 of the gold and silver coin to be taken for each period of four 
 weeks. Consequently, as every Scotch bank becomes aware that 
 its circulation is about to experience the ordinary half-yearly 
 expansion, the estimated amount required is brought down from 
 London at the commencement of the period. Every Scotch banker 
 endeavours to forecast the extent of his requirements befoie his 
 note circulation begins to rise, as it does from causes entirely 
 beyond his control, and dependent only on the ordinary business 
 of the country, and brings down from the Bank of England the 
 gold which he estimates he will need. A table is added showing 
 
116 ME. E. K. IXGLIS PALGBAVI".. 
 
 the highest and lowest points of the note circulation in each half- 
 year from 1846 to 1876, and the annual average circulation, by 
 examining which, we may judge of the extent to which the Bank 
 of England reserve is affected by this drain upon it. [Table L.] 
 On examining this it becomes clear that the increase in the Scotch 
 note circulation is continuous and progressive, and in the same 
 manner the spring and autumn demands for the excess of the note 
 issue over the limits of 1845 must also tend to increase. The 
 increase is caused by the natural requirements of the country, 
 the causes of which Mr. Gairdner, of the Union Bank of Scotland, 
 has described in the following words : — 
 
 " The main causes of the increased note issues in May and 
 November are undoubtedly these : — 
 
 " 1st. The payments of rents and interests on mortgages, which, 
 in Scotland, are almost uniformly made at the half-yearly 
 terms of Whitsuntide (15th May) and Martinmas (11th 
 November.) 
 
 "2nd. The settlement of all important transactions in heritable 
 property, which are also fixed for the same terms. 
 
 " 3rd. The payment of household and farm servants' wages, 
 and in many cases salaries, at the same period. 
 
 " These payments are to a large extent made through the 
 medium of bank notes, and thus they get into hands where they 
 remain for a time, many of the parties who receive the notes 
 having no bank account. 
 
 " It is further to be noted : — 
 
 " 1st. That on the fourth of the month an unusually large 
 amount of bills fall due, and if the 4th happens on a 
 Saturday (the day when the returns are made up) we 
 generally look for a heavier return on that account. 
 
 11 2nd. The November returns are usually heavier than those in 
 May, because of the requirements of the harvest, travellers, 
 &c, 
 
ON NOTE CIRCULATION IN THE CONDUCT OF BANKING BUSINESS. 117 
 
 u 3rd. In the country districts the term-days are in many 
 places regulated by the old style, and thus the payment of 
 farm rents runs on into June and December. 
 " 4th. The great increase this year (1873), is no doubt chiefly 
 owing to the higher scale of wages, particularly in the 
 mining districts, among the most improvident class of 
 working people." 
 That such comparatively trivial and strictly domestic causes, 
 operating in remote and principally rural districts, should have 
 a tendency to influence the rate of interest charged by the Bank of 
 England, and consequently throughout the empire, is a remarkable 
 instance of the close interdependence of the present requirements 
 of business on each other under the existing system. Judging by 
 the experience of the past, it is far more likely that the Scotch 
 note circulation will increase than that it will diminish ; thus, so 
 far as this influence extends, a greater pressure may be expected 
 for the future every spring and autumn.^ 
 
 The following observations made by Mr. "Weguelin, who was 
 Governor of the Bank of England in 1857, show that he considered 
 that the fluctuations in the internal circulation of the country had 
 an important influence on the Bank of England reserve, even at 
 that date. Mr. "Weguelin was examined before the Select Com- 
 mittee of the House of Commons, appointed in 1857 to enquire 
 into the operation of the Bank Acts. The following is a quotation 
 from Mr. Weguelin's evidence. The questions were asked by the 
 Right Honourable Edward Card well, now Lord Cardwell, and 
 referred. to the demands on the reserve of the Bank of England in 
 the autumn. 
 
 " 42. Is there not a demand upon you at that period of the year 
 for Scotland and Ireland ? — There is a demand for coin, but not for 
 notes. 
 
 " 43. That coin being intended to sustain the increased local 
 circulation in Scotland and Ireland ? — Precisely so. 
 
 * This subject was mentioned in a letter to the " Economist " of September 
 6, 1874, from which many of these details are taken. 
 
118 ME. E. H. INGLIS PALGEAVE, 
 
 " 44. Is there not a corresponding demand in the same period 
 of the year for an increased circulation in England and Wales? — 
 Yes, we think there is, but we cannot trace that so well as we can 
 the Scotch and Irish demand. The reason why we can trace the 
 Scotch and Irish demand better than the English demand is this, 
 that by the law of 1845, by which the Scotch and Irish banks 
 were regulated, those banks are bound to deposit a certain amount 
 of coin in specified places for any amount of notes issued by them 
 beyond the amount authorised under those Acts. 
 
 "45. That is to say, if there be a demand for increased circula- 
 tion of small amounts for retail transaction, it will be transacted in 
 England and Wales by an increase of the metallic currency, but in 
 Scotland and Ireland by an increase of small notes, which must be 
 increased by the demand upon you for bullion under the present 
 law? — That is the operation of it." 
 
 Mr. Weguelin also expressed his opinion on the subject in a 
 letter to Sir G. C. Lewis, then Chancellor of the Exchequer, printed 
 in the Appendix to the Eeport of the Committee of 1857 : — 
 
 "Now, with regard to the oscillation of the internal circulation 
 of the country, I may notice that there is periodically a demand for 
 currency from the Scotch and Irish banks, which, whilst it produces 
 a most sensible effect upon the Bank of England reserve, is uncon- 
 trollable by any action of the bank. At certain periods of the year, 
 especially after harvest, the demand for currency commonly greatly 
 exceeds the authorised issue, and as the excess must be issued on 
 gold deposited in certain specified places, the gold is withdrawn 
 from the Bank reserve to be again restored to it when the reflux of 
 the currency of the Scotch and Irish banks take place, which is 
 usually in the months of December to March. The Scotch banks 
 very generally exceed their authorised aggregate issue ; but with 
 the Irish banks, although the aggregate is not usually exceeded, 
 yet it often happens that some are in excess, whilst others are 
 under the authorised amount. But as each bank has to provide for 
 its own excess, the demand on the London bullion reserve is as 
 great as if the whole Irish circulation had gone beyond its limit. 
 
ON NOTE CIRCULATION IN THE CONDUCT OF BANKING BUSINESS. 119 
 
 The banking reserve is acted upon disadvantageously in similar 
 proportions ; as, practically speaking, it must be understood that 
 the banking reserve is the balance of the total issue after satisfying 
 the wants of the public for circulation." 
 
 Since 1857, the date when Mr. Weguelin made these remarks, 
 there has been a vast increase in the amount of the banking deposits 
 of the country, but the increase in the reserve has not followed in 
 the same proportion. 
 
 XVIII. — Concluding Remarks. 
 
 It is not possible to carry this investigation further at this time, 
 but it has been shown by examples taken from the experience of 
 banking in England, Scotland, Ireland, France, Germany, Sweden, 
 Switzerland, and Belgium, our Australian Colonies and America, 
 that a note issue when made either by a State bank or by a bank 
 in close connection with the Government, is powerless for the pur- 
 pose of attracting deposits, and thus for facilitating the main purpose 
 of banking, while the same circulation when in the hands of banks 
 conducted on regular banking principles is a most powerful instru- 
 ment for that purpose, and thus promotes the prosperity of the 
 State in a far more complete manner than the note circulation when 
 made by the Government. The results shown by banks in coun- 
 tries as differently circumstanced and as far from each other as 
 Scotland, Sweden, and Switzerland, all show the same facts. 
 
 The provisions of the Act of 1844 have tended to transfer the 
 portion of the English provincial note circulation which has been 
 swept away under the operation of that Act, to the circulation of 
 the Bank of England. The Acts of 1845 have not fettered the 
 Scotch and Irish note circulations in a similar manner, but the pro- 
 visions of those Acts which compel gold to be held by the banks in 
 those countries for every note which they issue beyond the limit 
 authorised by the law, have transferred the periodical fluctuations 
 in the circulation of those countries to the reserve of the Bank of 
 England. 
 
 The rate of discount charged by the Bank of England is, of 
 
 i 
 
120 MR. R. H. INGLIS PALGRAVE, 
 
 necessity, governed by the demands made on the reserve, and it is 
 clear that demands made on the reserve in connection with the 
 provincial issues have been not without an influence on the rate of 
 interest charged by the bank. The Scotch demand for additional 
 note circulation, now double the amount it was in 1844, reaches its 
 maximum in the months of May and November. The tables of the 
 minimum rate of discount charged by the Bank show that the rate 
 of discount in those months is distinctly above the average of the 
 whole of the year ; and this augmentation has tended to increase 
 during the ten years ending with December, 1874. A comparison of 
 these dates with the returns of the London clearinghouse [Table T.] 
 shows that there is no corresponding activity in trade generally to 
 account for this greater demand during the months of May and 
 November. The conclusion distinctly appears to be, that the 
 augmented demand consequent on the increase in the Scotch circu- 
 lation, has led to this enhancement in the rate of discount during 
 these particular months. It is not possible to trace the influence 
 of the diminution of the English provincial circulation with similar 
 exactness. But what can be traced as to the influence of the 
 Scotch note issue, leads to the inference that the diminution in the 
 provincial English note circulation which has resulted from the 
 operation of the Act of 1844, and has caused in consequence an 
 increase in the note circulation of the Bank of England, has tended 
 in the same direction. 
 
 The following extract from Mr. George Rae's evidence before 
 the Committee of the House of Commons on Banks of Issue, 
 1875, will show what the effect of centralizing the circulation 
 may be expected to be : — 
 
 Question No. 5,051, asked by Mr. Backhouse. 
 
 " Have you any other reason that you wish to state in regard to 
 your circulation?" 
 
 " I will state a few reasons why I think so. The issues of the 
 country banks not being subject to the sometimes great and 
 irregular fluctuations in the reserve of gold in the issue Department 
 of the Bank of England, but to a limit, which is admittedly below 
 
ON NOTE CIRCULATION IN TIIE CONDUCT OP BANKING BUSINESS. 121 
 
 the currency requirements of the country districts, maintain a 
 regularity of movement which imparts steadiness and ease to the 
 operations of the agricultural, industrial, and other interests of the 
 districts in which they chiefly circulate. Thus, instead of being 
 an element of disturbance in a momentary panic, the country issues, 
 resting on their own reserve of gold, are an element of strength, 
 for they perform all the functions of a currency in the country 
 districts at such a juncture without embarrassing the action of the 
 B mk of England, or adding to the anxieties and dangers of a crisis 
 by withdrawals of gold. The money panics which, every ten 
 years or so, appear to visit the metropolis and the great, provincial 
 centres have not, thus far, afflicted the country districts, mainly 
 because they possess a currency of their own, which, to the 
 measure of its amount, enables them to conduct their every day tran- 
 sactions independently of the vicissitudes of the ''money market ;" 
 but if this currency were to be suppressed, and substituted by 
 notes of the .Bank of England, the exemption of the country dis- 
 tricts from the severities of a money panic would cease, because 
 the Bank of England notes in circulation in country parts would 
 then be subject to the same law of fluctuation as those in circula- 
 tion in the capital or elsewhere, and every movement in the- 
 bullion in the issue department would be as quicky felt at 
 Leicester as at Liverpool, at Saffron Walden as in the city of 
 London. Xow, inasmuch as people in country parts have been 
 accustomed for many years to procure with perfect ease such 
 ordinary and reasonable banking facilities as they required, it will 
 be difficult to reconcile them to even a temporary or partial 
 withdrawal of these facilities whenever the foreign exchanges may 
 happen to be seriously against England. The manufacturer or 
 trader, the farmer or cattle-dealer, or any one else in undiminished 
 credit, who has always maintained such discounts or advances a3 
 he might require from time to time in the legitimate conduct of 
 his business, will hardly be reconciled to the refusal or serious 
 curtailment of such accustomed facilities on the ground that the 
 position of the issue department renders a contraction of such 
 facilities imperative. In their excusable ignorance of the depart- 
 
122 ME. E. H. INGLIS PALGEAVE, 
 
 ment in question, and their inability to comprehend why it should 
 interfere with their few and simple transactions, which have never 
 suffered interruption before, many persons would be apt to assign 
 the alleged scarcity of money to poverty on the part of the banks 
 themselves, and thus originate a movement on banking deposits, 
 which under perfectly conceivable circumstances might add a new 
 feature and a fresh danger to our next panic." 
 
 The practice of keeping the main cash reserve of the country 
 in the hands of the Bank of England is no doubt a source of great 
 economy, both to the banks and to the public generally, but it is 
 attended with the unavoidable result, that every demand for addi- 
 tional supplies, whether for gold or export, or to meet the 
 domestic requirements of the country, is centralised on the reserve 
 of the bank. An expansion of the English provincial circulation, 
 similar to that which occurs in Scotland, takes place between the 
 August and October of every year in this country ; if the provincial 
 note circulation of the country were swept away, or concentrated 
 on one central department, this demand would be at once trans- 
 ferred to the central reserve. The expansions and contractions of 
 the provincial circulation are periodic, and are dependent on the 
 local wants of the population. To connect all these local require- 
 ments with the central reserve of the country would introduce 
 increased demands on it, which could only be met by increased 
 fluctuations in the rate of discount, corresponding to those already 
 caused by the Scotch demand for gold under the Act of 1845, to 
 meet the increased note issue in May and November. In ordinary 
 periods these additional demands would be inconvenient, and in 
 times of pressure they might be overwhelming. 
 
 It is true that the actual amount of the rise in the bank rate 
 shown in the tables, as resulting at the present time from the 
 Scotch demand in May and November of each year, is compara- 
 tively small — but it is not therefore unimportant — especially as it 
 is shown to be progressive, and to be continually on the increase. 
 The fluctuations in the bank rate of discount form the readings of 
 the Barometer of Commerce, and any influence which produces a 
 periodical effect on them, deserves our careful attention. 
 
123 
 
 TABLES ILLUSTRATIVE OF THE SUBJECT. 
 
 Table A. — Information respecting the Proportions of the Capital, 
 
 Deposits, and Circulation in the principal English 
 Issuing Joint Stock Banks between 1844-74. 
 
 j> 
 
 >> 
 
 jj 
 
 >> 
 
 B. — Bank of Geneva. 
 
 C. — The Bank of the Canton of Freibourg, in Switzerland. 
 
 D. — Bremen Bank. 
 
 E. — The Resources and Liabilities of the " National " Banks 
 of America, 2nd October, 1876. 
 
 F. — Bank of France : Analysis of Returns for 1876. 
 
 G. — Imperial Bank of Germany : Analysis of Returns for 
 1876. 
 
 H. — National Bank of Belgium and National Bank of 
 Austria, Yearly Averages of Monthly Returns. 
 
 I. — Bank of England : Private Deposits {after deducting 
 Bankers' Balances) from 1844 to 1875. 
 
 „ K. — Exports and Imports, Great Britain and Ireland, 1825- 
 
 1845. 
 
 K 
 
 >> 
 
 >> 
 
124 
 
 Table L. — Lowest and Highest Amounts of Circulation of Scotch 
 
 Banks in eaeh year, from 1846 to 1376. 
 
 „ M. — Exports and Imports of United Kingdom, Amounts 
 passed through the London Clearing House, and the 
 total Bank Note Circulation of all the Issuing 
 Banks in the United Kingdom. 
 
 „ N. — Average Rate of Discount for "First Class Bills" for 
 the twenty years, 1825-44. 
 
 >> 
 
 jj 
 
 * 
 
 0. — Monthly Averages of Bates of Discount for First Class 
 Bills from 1825 to 1844. 
 
 P.— Average Bate of Discount for First Class Bills, for the 
 ten years, 1825-1834; 1835-1844; and the twenty 
 years, 1825-1844. 
 
 Jt Q. — Average Minimum Bate of Discount charged by the 
 Bank of England for the thirty years 1845-74. 
 
 „ B. — Monthly Averages of Bank of England Minimum Bates 
 of Discount, from 1845 to 1876. 
 
 „ S. — Averages of Bank of England Minimum Bate of 
 Discount for the ten years, 1845-54; 1855-64; 
 1865-74 ; and for the thirty years, 1845-74. 
 
 T.— Bankers' Clearing House Returns, 1868-1876. 
 
125 
 
 TABLE A.— INFORMATION RESPECTING THE PROPORTIONS OF 
 THE CAPITAL, DEPOSITS, AND CIRCULATION IN THE 
 PRINCIPAL ENGLISH ISSUING JOINT-STOCK BANKS BE- 
 TWEEN 1S44— 71. 
 
 Proportion of Deposits held by 36 Issuing Banks in England in 1874, as 
 
 compared with 1844. 
 
 
 100 
 
 18 7 4. 
 
 1.245 
 
 655 
 
 425 
 
 307 
 
 218 
 
 196 
 
 690 
 
 507 
 
 406 
 
 300 
 
 239 
 
 175 
 
 674 
 
 501 
 
 381 
 
 294 
 
 237 
 
 175 
 
 642 
 
 477 
 
 348 
 
 272 
 
 235 
 
 173 
 
 600 
 
 450 
 
 328 
 
 261 
 
 217 
 
 160 
 
 580 
 
 438 
 
 327 
 
 250 
 
 209 
 
 143 
 
 Total Average, 1844 
 1874 
 
 >> 
 
 = 100 
 = 350 
 
 Replies received from 36 Issuing Joint Stock. Banks in England and "Wales, 
 as to the proportion borne by their Circulation to their Deposits in the 
 years 1844 and 1874, respectively. 
 
 1844. 
 
 1874. 
 
 1844. 
 
 1874. 
 
 1844. 
 
 1874. 
 
 1844. 
 
 1874. 
 
 Per cent. 
 
 Per cent. 
 
 Per cent. 
 
 Per cent. 
 
 Per cent. 
 
 Per cent. 
 
 Per cent. 
 
 Per cent . 
 
 40 
 
 71 
 
 22 
 
 5 
 
 14 
 
 61 
 
 »1 
 
 2 
 
 35 
 
 6 
 
 22 
 
 11 
 
 14 
 
 5 
 
 11 
 
 21 
 
 34 
 
 4i 
 
 211 
 
 1 
 
 131 
 
 5 
 
 ioi 
 
 5 
 
 33 
 
 11 
 
 20 
 
 5 
 
 13 
 
 4 
 
 10 
 
 2 
 
 33 
 
 81 
 
 181 
 
 6 
 
 121 
 
 3 
 
 10 
 
 5 
 
 31 
 
 4 
 
 18 
 
 5 
 
 12 
 
 21 
 
 9^ 
 
 2 
 
 26 
 
 4 
 
 161 
 
 6 
 
 12 
 
 5 
 
 9 
 
 3 
 
 25 
 
 5 
 
 15 
 
 2^ 
 
 12 
 
 4 
 
 8 
 
 21 
 
 24 
 
 16 
 
 14 
 
 4 
 
 "1 
 
 2 
 
 8 
 
 3 
 
 Proportion of Circulation to Deposits. 
 Total Average, 1844 17 Per cent. 
 
 >» 
 
 1874 
 
 M 
 
126 
 
 Replies received from 36 Issuing Joint Stock Banks in England and "Wales, 
 as to the Amounts of Deposits held by them in the Years 1844 and 1874 
 respectively, and the Proportion borne by their Circulation to their 
 Deposits at both Dates. 
 
 Thirty-six Banks. 
 
 Ybab. 
 
 Authorised Issue. 
 
 Deposits. 
 
 Proportion of Issue 
 to Deposits. 
 
 1844 .. 
 1874 .. 
 
 £. 
 2,021,289 
 
 Actual Issue : 
 1,746,245 
 
 £. 
 
 12,008,068 
 
 42,342,294 
 
 Per Cent. 
 17 
 
 4 
 
 Proportion of Deposits in 1844 
 to that in . . . . 1874 
 
 1844 = 100 
 1874 = 353 
 
 Replies received from 25 Issuing Banks in England and "Wales as to tho 
 Proportion of their Capital to their Circulation in 1844 and 1874 
 
 respectively. 
 
 Twenty-five Banks. 
 
 Yeah. 
 
 Authorised Issue. 
 
 Capital. 
 
 Proportion of Issue 
 to Capital. 
 
 1844 .. 
 1874 .. 
 
 £>. 
 1,149,119 
 
 Actual Issue : 
 949,758 
 
 £. 
 2,064,492 
 
 7,223,323 
 
 Per Cent. 
 56 
 
 13 
 
 Statement as to the Position of 59 Banks, Issuing and Non-Issuing, 
 
 in England and Wales in 1875. 
 
 Capital 
 Reserves 
 
 Deposits . . , 
 
 Acceptances and other 
 Liabilities . . 
 
 Total Liabilities to the 
 Public 
 
 £. 
 
 17,591,329 
 
 7,649,731 
 
 25,241,060 
 129,866,919 
 
 9,979,653 
 
 139,846,572 
 
 Proportion of Capital and Reserves 
 to Deposits, 19£ per cent. 
 
 Proportion of Capital and Reserves 
 to Total Liabilities, 18 per cent. 
 
127 
 
 Replies received from 21 Issuing Banks in England and Wales as to tho 
 Amounts of their Capital and Deposits, and Circulation, 1844 and 1874 
 respectively. 
 
 Twenty-one Banks. 
 
 Year. 
 
 Authorised Issue. 
 
 Capital. 
 
 Deposits. 
 
 Proportion of 
 
 Capital 
 to Deposits. 
 
 
 £. 
 
 £. 
 
 £. 
 
 Per Cent. 
 
 1844 .. 
 
 956,605 
 Actual Issue: 
 
 1,802,292 
 
 5,831,909 
 
 31 
 
 1874 .. 
 
 766,177 
 
 6,130,107 
 
 25,009,113 
 
 24 
 
 TABLE B.— BANK OF GENEVA. 
 
 
 
 
 Accounts not 
 
 Accounts 
 
 
 Year. 
 
 Reserve. 
 
 Circulation, 
 
 bearing 
 Interest. 
 
 bearing 
 Interest. 
 
 Capital. 
 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 1853 
 
 13,320 
 
 27,880 
 
 10,080 
 
 
 
 1854 
 
 13,360 
 
 26, 360 
 
 10,800 
 
 
 
 1855 
 
 14,720 
 
 25,600 
 
 12,800 
 
 6,520 
 
 66,560 
 
 1856 
 
 25,400 
 
 37,880 
 
 30,600 
 
 26,080 
 
 66,560 
 
 1857 
 
 26,600 
 
 36,000 
 
 14,800 
 
 50,560 
 
 67,760 
 
 1858 
 
 18,200 
 
 33, 320 
 
 20,400 
 
 84,160 
 
 68,480 
 
 1859 
 
 19,080 
 
 32,480 
 
 27,320 
 
 62,400 
 
 80,000 
 
 1860 
 
 24,480 
 
 35,880 
 
 26,120 
 
 62,640 
 
 88,000 
 
 1861 
 
 21,480 
 
 27,880 
 
 17,120 
 
 47,840 
 
 IOO, coo 
 
 1862 
 
 26,600 
 
 38,000 
 
 23,680 
 
 65,320 
 
 100,000 
 
 1863 
 
 24,760 
 
 33f8oo 
 
 28,4S0 
 
 58,360 
 
 100,000 
 
 1864 
 
 14,720 
 
 33,480 
 
 20,880 
 
 48,160 
 
 100,000 
 
 1865 
 
 22,920 
 
 28,560 
 
 30,800 
 
 41,520 
 
 100,000 
 
 1866 
 
 36,160 
 
 26,640 
 
 30,800 
 
 57.280 
 
 100,000 
 
 1867 
 
 21,520 
 
 27,920 
 
 13,480 
 
 53,400 
 
 100,000 
 
 1868 
 
 22,560 
 
 32,200 
 
 15,200 
 
 59,600 
 
 IOO, coo 
 
 1869 
 
 18,880 
 
 34,040 
 
 16,040 
 
 74,120 
 
 100,000 
 
 1870 
 
 22,880 
 
 39,520 
 
 20,200 
 
 52,000 
 
 100,000 
 
 1871 
 
 33,200 
 
 48,000 
 
 19,880 
 
 60,000 
 
 100,000 
 
 1872 
 
 24,520 
 
 53,48o 
 
 18,400 
 
 56,400 
 
 100,000 
 
 1873 
 
 27,200 
 
 72,000 
 
 18,960 
 
 45,120 
 
 100,000 
 
 1874 
 
 43,120 
 
 108,320 
 
 30,040 
 
 47,640 
 
 100,000 
 
 Converting the Franc at 25 =ȣ1. From the " Economise Fran$ais," Jan. 13, 1877. 
 
128 
 
 TABLE C— THE BANK OF THE CANTON OF FREIBOTJRG IN 
 
 SWITZERLAND. 
 
 [The franc is converted at 25 — £1 in this Table.] 
 
 
 
 Advances on 
 
 Annual 
 Average of 
 
 Notes in 
 Circulation. 
 
 
 Amount of 
 
 
 Preserve 
 
 
 
 LiOcal Securi- 
 
 Annual 
 
 Deposits at 
 
 Bills on 
 
 on 
 
 Year. 
 
 Capital. 
 
 ties. Amount 
 
 Average of 
 
 Interest on 
 
 other 
 
 31st Dec. 
 
 
 
 on 31st Dec. 
 
 Specie held. 
 
 31st Dec. in < 
 
 Countries- 
 
 in each 
 
 
 
 in each year. 
 
 
 each year. 
 
 
 year. 
 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 1851 
 
 17,600 
 
 12,920 
 
 600 
 
 — 
 
 3,520 
 
 440 
 
 40 
 
 1852 
 
 18,360 
 
 18,360 
 
 3,240 
 
 3,360 
 
 3,560 
 
 1,120 
 
 120 
 
 1853 
 
 22,000 
 
 21,120 
 
 6,180 
 
 3,120 
 
 6,560 
 
 2,000 
 
 320 
 
 1854 
 
 26,600 
 
 17,440 
 
 7,800 
 
 2,760 
 
 5,240 
 
 4,320 
 
 680 
 
 1855 
 
 34,720 
 
 29,520 
 
 7,880 
 
 3,400 
 
 6,880 
 
 3,320 
 
 1,000 
 
 1856 
 
 40,000 
 
 40,840 
 
 8,640 
 
 3,160 
 
 9,200 
 
 5,040 
 
 1,360 
 
 1857 
 
 40,000 
 
 35,000 
 
 10,720 
 
 4,200 
 
 6,680 
 
 4,440 
 
 1,880 
 
 1858 
 
 40,000 
 
 40,760 
 
 11,400 
 
 3,880 
 
 6,200 
 
 3,280 
 
 2,280 
 
 1859 
 
 40,000 
 
 44,960 
 
 11,080 
 
 6,640 
 
 8,600 
 
 3,800 
 
 2,720 
 
 1860 
 
 40,000 
 
 43,960 
 
 12,640 
 
 4,080 
 
 12,960 
 
 3,440 
 
 . 3,120 
 
 1861 
 
 40,000 
 
 51,080 
 
 13,320 
 
 4,000 
 
 13,640 
 
 1,960 
 
 3,560 
 
 1862 
 
 40,000 
 
 62,920 
 
 14,280 
 
 4,760 
 
 14,600 
 
 10,400 
 
 3,960 
 
 1863 
 
 40,000 
 
 68,840 
 
 14,440 
 
 4,240 
 
 14,280 
 
 7,520 
 
 4,400 
 
 1864 
 
 40,000 
 
 87,560 
 
 16,400 
 
 4,240 
 
 16,120 
 
 6,160 
 
 5,000 
 
 1865 
 
 66,400 
 
 106,280 
 
 18,080 
 
 5,200 
 
 26,520 
 
 10,360 
 
 10,000 
 
 1866 
 
 68,000 
 
 125,120 
 
 16,160 
 
 6,000 
 
 44,120 
 
 3,040 
 
 10,560 
 
 1867 
 
 68,000 
 
 135,840 
 
 13,560 
 
 5,840 
 
 46,880 
 
 5,600 
 
 11,240 
 
 1868 
 
 68,000 
 
 138,680 
 
 14,000 
 
 5,360 
 
 48,760 
 
 4,720 
 
 11,880 
 
 1869 
 
 68,000 
 
 155,800 
 
 14,400 
 
 6,400 
 
 57,000 
 
 6,560 
 
 12,640 
 
 1870 
 
 68,000 
 
 167,240 
 
 13,920 
 
 7,560 
 
 60,840 
 
 6,560 
 
 13,280 
 
 1871 
 
 68,000 
 
 184,200 
 
 14,080 
 
 14,760 
 
 70,400 
 
 7,960 
 
 2,200 
 
 1872 
 
 68,000 
 
 224,720 
 
 17,200 
 
 10,000 
 
 106,240 
 
 7,160 
 
 2,680 
 
 1873 
 
 93,600 
 
 246,240 
 
 30,800 
 
 9,200 
 
 111,640 
 
 9,920 
 
 2,880 
 
 1874 
 
 96,000 
 
 232,720 
 
 39,200 
 
 14,000 
 
 119,120 
 
 24,440 
 
 5,320 
 
 1875 
 
 96,000 
 
 209,960 
 
 39,200 
 
 14,800 
 
 127,680 
 
 22,880 
 
 6,680 
 
 1876 
 
 96,000 
 
 184,760 
 
 43,800 
 
 23,640 
 
 130,440 
 
 35,000 
 
 8,440 
 
 The Bank of the Canton of Freibourg is one of the eight oldest banks in 
 Switzerland which possess a note circulation. It has maintained up to this date 
 a quiet and undisturbed existence. The capital has never been large, but the 
 business has been carried on with great energy. The reserve is, however, but 
 small, as in the 27th year of the existence of the bank it still does not amount to 
 the tenth part of the capital. It has seven agencies at Bulle, Chatel, Estavayer, 
 Montagny, Morat, Romont and Rue, none of which are places of any large 
 size. It issues notes of the value of 500, 100, 20, 10, and as low as 5 francs. This, 
 information is derived from the "Economiste Fran9ais"of the 10th February 
 1877. 
 
129 
 
 TABLE D.— BREMEN BANK. 
 Stathmbnt of the 31st January, 1877 
 Assets, 
 
 Specie hold 
 
 Bills on the Imperial Treasury 
 
 Notes of other hanks 
 
 Total cash held 
 
 iring account at the Reichs Bank 
 Bills of Exchange 
 Advances on goods 
 •Sundry d«'htors 
 Other assets, including huildings and furniture 
 
 £144,219 
 
 2,780 
 
 17,595 
 
 164,594 
 
 21,845 
 
 1,708,042 
 
 207,641 
 
 5,845 
 
 34,177 
 
 £2,142,144 
 
 Liabilities 
 
 Capital 
 
 Be serve Fund 
 
 Notes in circulation 
 
 1 >< posits on demand 
 
 Deposits due after notice 
 
 Sundry credit accounts 
 
 Liabilities further described on bills falling due after 31st January 
 
 The mark converted at 20 = £1 in this statement. 
 From the " Bremen Handelsblatt," 3rd February, 1877. 
 
 £830,350 
 37,851 
 309,040 
 16,310 
 882,488 
 53,309 
 34,233 
 
 £2,163,581 
 
130 
 
 TABLE E.— THE RESOURCES AND LIABILLTIES OF THE 
 "NATIONAL "BANKS OF AMERICA, 2nd OCTOBER, 1876. 
 
 2,089 Banks then in Operation. 
 
 Resources. 
 
 
 
 Aggregate. 
 
 Loans and discounts , , . . 
 
 .. £185,514,996 
 
 Overdrafts 
 
 745,947 
 
 Bonds for circulation . . . . . . . . 
 
 67,434,080 
 
 Bonds for deposits 
 
 2,939,600 
 
 U.S. bonds on hand 
 
 6,628,430 
 
 Other stocks and bonds 
 
 6,889,032 
 
 Due from reserve agents 
 
 17,465,390 
 
 Due from other national banks 
 
 9,505,018 
 
 Due from other banks and bankers . . . . 
 
 2,412,257 
 
 Real estate, furniture and fixtures . . . . 
 
 8,624,388 
 
 Current expenses 
 
 1,397,529 
 
 Premiums 
 
 2,143,050 
 
 Cheques and other cash items 
 
 2,408,628 
 
 Exchanges for clearing house 
 
 17,574,163 
 
 Bills of other national banks 
 
 3,182,062 
 
 Fractional currency 
 
 283,440 
 
 OpGCl'v •• • • • • • • • ■ •• |l 
 
 4,272,154 
 
 Legal tender notes 
 
 16,850,169 
 
 U.S. certificates of deposit 
 
 5,834,000 
 
 Five per Cent, redemption fund 
 
 2,941,275 
 
 Due from U.S. treasurer 
 
 407,465 
 
 
 £365,453,073 
 
 Liabilities. 
 
 Capital stock 
 
 Surplus fund 
 
 Undivided profits 
 
 National bank notes outstanding 
 
 State bank notes outstanding 
 
 Dividends unpaid 
 
 Individual deposits . . 
 
 U.S. deposits .. 
 
 Deposits of U.S. disbursing officers 
 
 Due to National Bank 
 
 Due to other banks and bankers 
 
 Notes and bills rediscounted . , 
 
 Bills payable . , . . . . 
 
 
 £99,960,446 
 
 26,440,456 
 
 9,289,043 
 
 58,308,804 
 
 124,404 
 
 771,107 
 
 130,277,042 
 
 1,451,360 
 
 749,356 
 
 26,307,193 
 
 9,650,023 
 
 892,883 
 
 1,230,956 
 
 £365,453,073 
 
 From the Report of the " Comptroller of the Currency " Treasury Department, 
 Washington, December 2nd, 1876. 
 
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 lO 
 
 tH ■* 
 
 CO o 
 
 IQ 
 
 o 
 
 iC 
 
 iO 
 
 CO 
 
 9 
 
 to 
 
 >c 
 
 CO- 
 
 ua 
 
 ■* 
 
 - u 
 
 t^ 
 
 co 
 
 O 
 
 
 
 C5 
 
 0) C5 
 
 o 
 
 -. 
 
 o o 
 
 o 
 
 OJ CJ 
 
 CJ CJ 
 
 C- 
 
 c^ 
 
 C3: 
 
 OS 
 
 OJ 
 
 — 
 
 CJ 
 
 c 
 
 OS 
 
 OS 
 
 OS 
 
 os 
 
 OS 
 
 OS 
 
 .d 
 
 ,o 
 
 33 
 
 C6 
 
 rd 
 
 o 
 
 d 
 d 
 o 
 o 
 
 O 
 
 cu 
 
 o 
 
 rd 
 
133 
 
 TABLE G.— IMPERIAL BANK OF GERMANY.— ANALYSIS OF 
 
 RETURNS FOR 1876. 
 
 [The Reichsmark converted at Is. in this Table. Taken from tho Returns 
 
 in the "Economist."] 
 
 
 
 
 1 
 
 
 Propor- 
 
 
 
 
 
 
 
 tion of 
 
 
 
 Circulation. 
 
 Deposits. 
 
 Total 
 
 Liabilities. 
 
 Coin and 
 
 Bullion. I 
 
 i>in and 
 Bullion 
 I.iubi- 
 
 ln eft, 
 lerOent. 
 
 Advances. 
 
 1876 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 £ 
 
 Jan. 7 
 
 35,774,000 
 
 5,060,000 
 
 40,834,000 
 
 22,324,000 
 
 55 
 
 26,208,000 
 
 14 
 
 33,967,000 
 
 5,063,000 
 
 39,030,000 
 
 21,894,000 
 
 56 
 
 24,073,000 
 
 22 
 
 33,362,000 
 
 5,059,000 
 
 38,421,000 
 
 21,864,000 
 
 57 
 
 23,168,000 
 
 31 
 
 32,859,000 
 
 4,989,000 
 
 ".7.848,000 
 
 22,556,000 
 
 59 
 
 22,186,000 
 
 Feb. 7 
 
 32,277,000 
 
 4,805,000 
 
 37,082,000 
 
 23,019,000 
 
 62 
 
 21,378,000 
 
 15 
 
 32,087,000 | 
 
 4,731,000 
 
 36,818,000 
 
 23,267,000 
 
 63 
 
 20,500,000 
 
 23 
 
 31,856,000 1 
 
 4,691,000 
 
 36,547,000 
 
 23.823,000 
 
 65 
 
 20,517,000 
 
 29 
 
 31,547,000 
 
 4,655,000 
 
 36,202,000 
 
 24,230,000 
 
 67 
 
 20,292,000 
 
 Mch. 7 
 
 31,447,000 [ 
 
 4,571,000 
 
 36,018,000 
 
 24,250,000 
 
 67 
 
 19,949,000 
 
 14 
 
 31,054,000 i 
 
 4,546,000 
 
 35,600,000 
 
 25.053.000 
 
 70 
 
 19,377,000 
 
 23 
 
 31,292,000 
 
 4,496,000 
 
 35,788,000 
 
 25,349.000 
 
 7i 
 
 19,426,000 
 
 31 
 
 33,899,000 
 
 4,251,000 
 
 38,150,000 
 
 24,930,000 
 
 65 
 
 21,262,000 
 
 April 7 
 
 33,533,000 
 
 4,123,000 
 
 37,656,000 
 
 24,723,000 
 
 66 
 
 20,995,000 
 
 15 
 
 32,489,000 
 
 4,036,000 
 
 36,525,000 
 
 25,315,000 
 
 69 
 
 20,003,000 
 
 22 
 
 32,216,000 
 
 3,972,000 
 
 36,188,000 
 
 25,799.0°° 
 
 7i 
 
 20,248,000 
 
 29 
 
 33,831,000 
 
 3,900,000 
 
 37,731,000 
 
 26,071,000 
 
 69 
 
 21,513,000 
 
 May 9 
 
 33,279,000 
 
 3,791,000 
 
 37,070,000 
 
 26,725,000 
 
 72 
 
 20,916,000 
 
 15 
 
 32,988,000 
 
 3,716,000 
 
 36,704,000 
 
 27,325,000 
 
 74 
 
 19,968,000 
 
 22 
 
 32,539,000 
 
 3,677,000 
 
 36,216,000 
 
 27,911,000 
 
 77 
 
 19,964,000 
 
 29 
 
 32,962,000 
 
 3,564,000 
 
 36,526,000 
 
 28,178,000 
 
 77 
 
 20,383,000 
 
 June 7 
 
 32,444,C00 
 
 3,529,000 
 
 35,973,000 
 
 28,045,000 
 
 78 
 
 20,205,000 
 
 15 
 
 33,589,000 
 
 3,484,000 
 
 37,073,000 
 
 28,189,000 
 
 76 
 
 20,723.000 
 
 22 
 
 35,331,000 
 
 3,441,000 
 
 38,772,000 
 
 27.593.00° 
 
 7i 
 
 22,146,000 
 
 30 
 
 38,SS4,000 
 
 3,315,000 
 
 42,199,000 
 
 27,342,000 
 
 65 
 
 25,734,000 
 
 July 7 
 
 38,275,000 
 
 3,289,000 
 
 41,564,000 
 
 27,107,000 
 
 65 
 
 26,223,000 
 
 18 
 
 36,661,000 
 
 3,292,000 
 
 39,953,000 
 
 26,422,000 
 
 66 
 
 24,696,000 
 
 2.3 
 
 34,626,000 
 
 3,260,000 
 
 37,886,000 
 
 26,669,000 
 
 70 
 
 24,264,000 
 
 31 
 
 34,535,000 
 
 3,190,000 
 
 37,725,000 
 
 26,559,000 
 
 7o 
 
 24,106,000 
 
 Aug. 7 
 
 33,533,000 
 
 2,652,000 
 
 36,185,000 
 
 26,931,000 
 
 74 
 
 23,331,000 
 
 14 
 
 33,104,000 
 
 2,589,000 
 
 35,693,000 
 
 26,931,000 
 
 75 
 
 22,817,000 
 
 23 
 
 32,850,000 
 
 2.566,000 
 
 35,416,000 
 
 26,901,000 
 
 76 
 
 22,670,000 
 
 31 
 
 33,298,000 
 
 2,575,000 
 
 35,873,000 
 
 27,014,000 
 
 75 
 
 23,105,000 
 
 Sept. 7 
 
 33,126,000 
 
 2,602,000 
 
 35,728,000 
 
 26,535,000 
 
 74 
 
 22,605,000 
 
 16 
 
 33,321,000 
 
 ! 2,597,000 
 
 35,918,000 
 
 26,600,000 
 
 74 
 
 22.059,000 
 
 22 
 
 33,770,000 
 
 2,602,000 
 
 36,372,000 
 
 26,259,000 
 
 72 
 
 22,717,000 
 
 30 
 
 35,007,000 
 
 2,582,000 
 
 37,589,000 
 
 25,211,000 
 
 67 
 
 25,134,000 
 
 Oct. 7 
 
 36,619,000 
 
 2,600,000 
 
 39,219,000 
 
 25,014.000 
 
 64 
 
 25,136,000 
 
 14 
 
 36,414,000 
 
 2,604,000 
 
 39,018,000 
 
 24,479,000 
 
 63 
 
 25,051,000 
 
 23 
 
 36,248,000 
 
 2,599,000 
 
 38,847,000 
 
 24,618,000 
 
 63 
 
 25,505,000 
 
 31 
 
 36,665,000 
 
 2,515,000 
 
 39,180,000 
 
 24,371,000 
 
 62 
 
 25,972,000 
 
 Nov. 7 
 
 36.064,000 
 
 1 2,128,000 
 
 38,192,000 
 
 24,539,000 
 
 64 
 
 25,185,000 
 
 14 
 
 36,827,000 
 
 2,118,000 
 
 37,945,000 
 
 24,768,000 
 
 65 
 
 24,202,000 
 
 23 
 
 35,460,000 
 
 2,133,000 
 
 37,593,000 
 
 25,141,000 
 
 67 
 
 21.100,000 
 
 30 
 
 35,996,000 
 
 2,144,000 
 
 38,140,000 
 
 25,311,000 
 
 66 
 
 23,921,000 
 
 Dec. 7 
 
 35,331,0(10 
 
 2,136,000 
 
 37,467,000 
 
 25,672,000 
 
 69 
 
 23,242,000 
 
 15 
 
 35,30S,000 
 
 | 2,126,000 
 
 ,434,000 
 
 25,700,000 
 
 69 
 
 22,843,000 
 
 22 
 
 35,794,000 
 
 j 2,142,000 
 
 37,936,000 
 
 25.561,000 
 
 67 
 
 23,961,000 
 
 30 
 
 38,305,000 
 
 2,103,000 
 
 40,408,000 
 
 25,030,000 
 
 62 
 
 25,302,000 
 
 V irly 
 average 
 
 34,201,000 
 
 3,388,000 
 
 37,589,000 
 
 25,523,000 
 
 1 68 
 
 22,693,000 
 
134 
 
 TABLE H.— NATIONAL BANK OF BELGIUM. 
 
 Yearly Averages of Monthly Returns. 
 
 
 Metallic Reserve. 
 
 Circulation. 
 
 Government 
 Accounts. 
 
 Private Accounts. 
 
 1874 
 1875 
 
 £ 
 4,396,000 
 4,618,000 
 
 £ 
 12,044,000 
 12,768,000 
 
 £ 
 1,228,000 
 1,337,000 
 
 £ 
 
 1,012,000 
 1,164,000 
 
 Converting the Franc at 25 = £1. From the " Economists Frangais" 29th Jan. 
 
 1876. 
 
 NATIONAL BANK OF AUSTRIA. 
 
 Yearly Averages of Monthly Statements. 
 
 
 Metallic Reserve. 
 
 Circulation. 
 
 Current Accounts. 
 
 1875 
 1876 
 
 £ 
 
 13,870,000 
 13,900,000 
 
 £ 
 29,630,000 
 28,710,000 
 
 £ 
 158,000 
 122,000 
 
 Converting the Florin atl0 = £l. From the" JSconomiste Francais" 13th Jan. 
 
 1877. 
 
 TABLE I.— BANK OF ENGLAND.— Private Deposits (after Deducting 
 Bankers' Balances), from 1844 to 1875. 
 
 
 
 Proportion 
 
 0? 
 
 
 
 Proportioi 
 
 * K 
 
 *-*; *» 
 
 
 
 of Annual 
 
 c jeo 
 
 
 
 of Annual 
 
 2 e 
 
 
 Annual Aver- 
 
 Average of 
 
 
 
 Annual Aver- 
 
 Avenge 
 
 aogpo 
 
 
 age of Private 
 
 Private 
 
 
 
 age of Private 
 
 Private 
 
 c(§j| 
 
 
 Deposits. 
 
 Deposits to 
 
 Sr SO 
 
 
 Deposits. 
 
 Deposits to 
 
 oOo a 
 
 
 
 1844— 
 
 
 
 
 1844— 
 
 s- .5 5? 
 
 
 
 1844=100. 
 
 &E~I 
 
 
 
 1844=100. 
 
 &ST& 
 
 
 £ 
 
 £ 
 
 % 
 
 
 £ 
 
 £ 
 
 % 
 
 1844 
 
 7,170,000 
 
 IOO 
 
 51 
 
 1860 
 
 9,160,000 
 
 127 
 
 46 
 
 1845 
 
 8,440,000 
 
 n8 
 
 55 
 
 1861 
 
 8,320,000 
 
 116 
 
 47 
 
 1846 
 
 11,440,000 
 
 159 
 
 60 
 
 1862 
 
 8,950,000 
 
 125 
 
 42 
 
 1847 
 
 7,160,000 
 
 IOO 
 
 48 
 
 1863 
 
 8,070,000 
 
 114 
 
 41 
 
 1848 
 
 7,550,000 
 
 105 
 
 50 
 
 1864 
 
 8,330,000 
 
 116 
 
 42 
 
 1849 
 
 8,020,000 
 
 112 
 
 49 
 
 1865 
 
 9,000,000 
 
 126 
 
 43 
 
 1850 
 
 8,040,000 
 
 112 
 
 46 
 
 1866 
 
 10,080,000 
 
 140 
 
 47 
 
 1851 
 
 7,880,000 
 
 no 
 
 48 
 
 1867 
 
 12,090,000 
 
 168 
 
 47 
 
 1852 
 
 9,690,000 
 
 135 
 
 51 
 
 1868 
 
 13,400,000 
 
 187 
 
 53 
 
 1853 
 
 10,110,000 
 
 140 
 
 56 
 
 1869 
 
 11,660,000 
 
 162 
 
 50 
 
 1854 
 
 8,470,000 
 
 118 
 
 58 
 
 1870 
 
 10,570,000 
 
 148 
 
 43 
 
 1855 
 
 8,790,000 
 
 122 
 
 52 
 
 1871 
 
 12,930,000 
 
 1 So 
 
 45 
 
 1856 
 
 8,160,000 
 
 114 
 
 51 
 
 1872 
 
 12,310,000 
 
 171 
 
 43 
 
 1857 
 
 7,420,000 
 
 IO3 
 
 43 
 
 *1873 
 
 10,590,000 
 
 148 
 
 37 
 
 1858 
 
 9,520,000 
 
 133 
 
 48 
 
 1874 
 
 10,508,000 
 
 146 
 
 42 
 
 1859 
 
 10,180,000 
 
 I42 
 
 47 
 
 1875 
 
 10,847,000 
 
 151 
 
 41 
 
 * After 
 
 included 
 
 amount at that date was ahout £1,000,000 
 
 Returns dated 8th January, 1873, the Chancery Balances were 
 among Government Deposits instead of Private Deposits. The 
 
135 
 
 TABLE K.— EXPORTS AND IMPORTS, GREAT BRITAIN AND 
 
 IRELAND, 1825-1845. 
 
 1825.. 
 
 . . Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 . , Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 . . Exports 
 Imports 
 
 £ 
 ...... 38,8 1 0,S-)1 
 
 41,137,482 
 
 1830... 
 1837... 
 1838... 
 1839... 
 1840... 
 1841... 
 1842... 
 1843... 
 1844... 
 1845... 
 
 Imports . . 
 
 £ 
 . .. 53,308,572 
 . .. 57,023,807 
 
 
 83,008,333 
 
 110,392,439 
 
 1826.. 
 
 31,536,724- 
 
 37,680,113 
 
 . . . 54,737,301 
 
 
 69,222,837 
 
 96,808,045 
 
 1827.. 
 
 44,887,774 
 
 50,060,970 
 
 .... 61,268,320 
 
 
 81,748,150 
 
 111,329,290 
 
 1828.. 
 
 
 53,233,580 
 
 . . .. 62,004,000 
 
 
 81,512,133 
 
 115,237,580 
 
 1829.. 
 
 35,522,027 
 
 43,981,317 
 
 . . , . 67,432,964 
 
 
 79,503,944 
 
 US, 839, 394 
 
 1830.. 
 
 37,927,501 
 
 46,245,241 
 
 51,634,023 
 
 64,377,962 
 
 
 84,172,802 
 
 116,012,585 
 
 1831.. 
 
 36,839,738 
 
 
 
 86,553,627 
 
 112,585,752 
 
 1832.. 
 
 36,133,098 
 
 .... 52,279,709 
 
 
 80,719,839 
 
 122,373,062 
 
 1833.. 
 
 39,331,413 
 
 . . . . 58,584,292 
 
 
 85,283,904 
 
 144,025,847 
 
 1834.. 
 
 •• 49,302,811 
 
 
 
 ' 90,651,337 
 
 145,393,040 
 
 1835.. 
 
 
 
 
 95,932,200 
 
 
136 
 
 Table L. — Lowest and Highest Amounts of Circulation of Scotch Banks 
 
 in each Year from 1846 to 1876. 
 
 Authorised issue in 1845, £3,087,209 ; in 1858, £2,749,271. 
 
 
 
 
 
 
 Average 
 
 
 
 Lowest. 
 
 
 Highest. 
 
 for 
 Year. 
 
 
 
 
 £ 
 
 
 
 £ 
 
 £ 
 
 1846 
 
 First half 
 
 Mar. 28 
 
 3,003,000 
 
 May 
 
 30 
 
 3,652,000 
 
 3,400,000 
 
 
 Second half 
 
 July 25 
 
 3,301,000 
 
 Nov. 
 
 14 
 
 4,046,000 
 
 
 1847 
 
 First half 
 
 May 1 
 
 3,295,000 
 
 May 
 
 29 
 
 3,791,000 
 
 3,550,000 
 
 
 Second half 
 
 July 24 
 
 3,341,000 
 
 Nov. 
 
 13 
 
 3,783,000 
 
 
 1848 
 
 First half 
 
 Mar. 25 
 
 2,866,000 
 
 May 
 
 27 
 
 3,577,000 
 
 3,330,000 
 
 
 Second half 
 
 Aug. 26 
 
 2,964,000 
 
 Dec. 
 
 2 
 
 3,592,000 
 
 
 1849 
 
 First half 
 
 Mar. 24 
 
 2,840,000 
 
 May 
 
 26 
 
 3,481,000 
 
 3,220,000 
 
 
 Second half 
 
 July 21 
 
 2,974,000 
 
 Nov. 
 
 24 
 
 3,560,000 
 
 
 1850 
 
 First half 
 
 Mar. 23 
 
 2,944,000 
 
 May 
 
 25 
 
 3,567,000 
 
 3,220,000 
 
 
 Second half 
 
 July 27 
 
 3,090,000 
 
 Nov. 
 
 23 
 
 3,694,000 
 
 
 1851 
 
 First half 
 
 Mar. 29 
 
 3,001,000 
 
 May 31 
 
 3,537,000 
 
 3,210,000 
 
 
 Second half 
 
 July 26 
 
 3,056,000 
 
 Nov. 
 
 22 
 
 3,659,000 
 
 
 1852 
 
 First half 
 
 Mar. 27 
 
 3,010,000 
 
 June 
 
 5 
 
 3,649,000 
 
 3,400,000 
 
 
 Second half 
 
 July 24 
 
 3,215,000 
 
 Nov. 
 
 20 
 
 3,976,000 
 
 
 1853 
 
 First half 
 
 Feb. 26 
 
 3,417,000 
 
 May 
 
 28 
 
 4,096,000 
 
 3,S00,000 
 
 
 Second half 
 
 July 23 
 
 3,644,000 
 
 Nov. 
 
 12 
 
 4,358,000 
 
 
 1854 
 
 First half 
 
 Mar. 25 
 
 3,735,000 
 
 May 
 
 20 
 
 4,403,000 
 
 4,050,000 
 
 
 Second half 
 
 Aug. 26 
 
 3,790,000 
 
 Dec. 
 
 2 
 
 4,516,000 
 
 
 1855 
 
 First half 
 
 Mar. 24 
 
 3,655,000 
 
 May 
 
 26 
 
 4,498,000 
 
 4,100,000 
 
 
 Second half 
 
 Aug. 25 
 
 3,904,000 
 
 Nov. 
 
 24 
 
 4,703,000 
 
 
 1856 
 
 First half 
 
 Mar. 29 
 
 3,735,000 
 
 May 
 
 31 
 
 4,574,000 
 
 4,090,000 
 
 
 Second half 
 
 Aug. 23 
 
 3,856,000 
 
 Nov. 
 
 22 
 
 4,647,000 
 
 
 1857 
 
 First half 
 
 *Mar. 28 
 
 3,649,000 
 
 J June 
 
 6 
 
 4,339,000 
 
 4,050,000 
 
 
 Second half 
 
 Aug. 8 
 
 3,974,000 
 
 Oct. 
 
 3 
 
 4,422,000 
 
 
 1858 
 
 First half 
 
 Mar. 6 
 
 3,602,000 
 
 June 
 
 5 
 
 4,212,000 
 
 3,810,000 
 
 
 Second half 
 
 Aug. 7 
 
 3,789,000 
 
 $Dec. 
 
 4 
 
 4,624,000 
 
 
 1859 
 
 First half 
 
 April 2 
 
 3,82^,000 
 
 June 
 
 4 
 
 4,726,000 
 
 4,110,000 
 
 
 Second half 
 
 Aug. 6 
 
 4,027,000 
 
 Dec. 
 
 3 
 
 4,854,000 
 
 
 I860 
 
 First half 
 
 April 7 
 
 4,012,000 
 
 June 
 
 2 
 
 4,665,000 
 
 4,220,000 
 
 
 Second half 
 
 Sept. 8 
 
 4,138,000 
 
 Dec. 
 
 8 
 
 4,607,000 
 
 
 1861 
 
 First half 
 
 April 6 
 
 3,936,000 
 
 June 
 
 8 
 
 4,481,000 
 
 4,200,000 
 
 
 Second half 
 
 Sept. 7 
 
 4,069,000 
 
 Dec. 
 
 7 
 
 4,616,000 
 
 
 L862 
 
 First half 
 
 Mar. 8 
 
 3,869,000 
 
 June 
 
 7 
 
 4,518,000 
 
 4,150,000 
 
 
 Second half 
 
 Aug. 2 
 
 4,017,000 
 
 Dec. 
 
 6 
 
 4,481,000 
 
 
 1863 
 
 First half 
 
 Mar. 7 
 
 3,886,000 
 
 June 
 
 6 
 
 4,744,000 
 
 4,200,000 
 
 
 Second half 
 
 Aug. 8 
 
 4,139,000 
 
 Dec. 
 
 5 
 
 4,591,000 
 
 
 1864 
 
 First half 
 
 April 2 
 
 4,035,000 
 
 June 
 
 4 
 
 4,975,000 
 
 4,250,000 
 
 
 Second half 
 
 Sept. 3 
 
 4,277,000 
 
 Dec. 
 
 o 
 O 
 
 4,684,000 
 
 
 1865 
 
 First half 
 
 April 1 
 
 3,972,000 
 
 May 
 
 27 
 
 4,596,000 
 
 4,380,000 
 
 
 Second half 
 
 Sept. 16 
 
 4,305,000 
 
 Dec. 
 
 9 
 
 4,903,000 
 
 
 1866 
 
 First half 
 
 Mar. 31 
 
 4,134,000 
 
 May 
 
 26 
 
 4,608,000 
 
 4,400,000 
 
 
 Second half 
 
 Sept. 15 
 
 4,264,000 
 
 Dec. 
 
 8 
 
 4,967,000 
 
 • 
 
 * From Reports of Select Committee on Bank Acts, 1857. 
 
 % From this point to the end of the year 1870 the returns are given for the firBt week 
 only in each month in the year from the " Miscellaneous Statistics." 
 § Authorised issue, £2,749,271. 
 
137 
 
 Taule L — continued, 
 
 
 
 
 
 
 A vera go 
 
 
 
 Lowest. 
 
 Ilighc st. 
 
 tor 
 
 
 
 
 
 
 Year. 
 
 
 
 
 £ 
 
 
 £ 
 
 
 1867 
 
 First half 
 
 Mar. 30 
 
 4,221,000 
 
 May 25 
 
 2,822,000 
 
 4,570,000 
 
 
 Second half 
 
 Sept. 14 
 
 4,404,000 
 
 Dec. 7 
 
 5,055,000 
 
 
 1868 
 
 First half 
 
 Mar. 7 
 
 4,419,000 
 
 June 6 
 
 4,974,000 
 
 4,600,000 
 
 
 8 "hJ half 
 
 Aug. 1 
 
 4,515,000 
 
 Dec. 5 
 
 5.0X8,000 
 
 
 1869 
 
 First half 
 
 Mar. 6 
 
 1,522,000 
 
 Juno 5 
 
 4,972,000 
 
 4,730,000 
 
 
 Second half 
 
 Aug. 7 
 
 4,568,01)0 
 
 Dec. 4 
 
 5,331,000 
 
 
 1S70 
 
 First half 
 
 Mar. 5 
 
 4,517,000 
 
 June 4 
 
 5,483,000 
 
 4,930,000 
 
 
 Second half 
 
 Sept. 3 
 
 4,781,000 
 
 Dec. 3 
 
 5,612,000 
 
 
 1S71 
 
 "hirst half 
 
 fMar. 25 
 
 4,789,000 
 
 June 17 
 
 5,451,000 
 
 5,1L0,0C0 
 
 
 Second half 
 
 Aug. 12 
 
 5,137,000 
 
 Dec. 2 
 
 5,715,000 
 
 
 1872 
 
 First half 
 
 Mar. 23 
 
 4,778,000 
 
 June 15 
 
 5,717,000 
 
 5,320,000 
 
 
 Second half 
 
 Aug. 10 
 
 r>.226,000 
 
 Nov. 30 
 
 6,210,000 
 
 
 1873 
 
 First half 
 
 Mar. 22 
 
 5,160,000 
 
 June 14 
 
 6,064,000 
 
 5,615,000 
 
 
 Si c md half 
 
 Aug. 9 
 
 5,502,000 
 
 Nov. 29 
 
 6,393,000 
 
 
 1874 
 
 First half 
 
 Mar. 21 
 
 5,468,676 
 
 June 13 
 
 6,410,829 
 
 5,902,971 
 
 
 Second half 
 
 . Sept. 5 
 
 5,693,929 
 
 Nov. 28 
 
 6,719,057 
 
 
 1875 
 
 First half 
 
 . April 17 
 
 5,535,118 
 
 June 12 
 
 6,616,043 
 
 6,050,909 
 
 
 Second half 
 
 . Sept. 4 
 
 5,873,681 
 
 Nov. 27 
 
 6,883,326 
 
 
 1876 
 
 First half 
 
 . Mar. 18 
 
 5,531,070 
 
 June 10 
 
 6,762,925 
 
 6,098,543 
 
 
 Second half 
 
 . Sept. 2 
 
 5,901,834 
 
 Nov. 25 
 
 7,015,743 
 
 
 t From this point the average of 4 weeks taken from the " Gazette" is given. 
 
138 
 
 TABLE M. — Exports and Imports of United Kingdom, Amounts passed 
 
 all the Issuing Banks 
 
 Year. 
 
 1844. 
 Exports . . 
 Imports . . 
 
 Total* 
 
 1868. 
 Exports . 
 Imports . 
 
 Total. 
 
 1869. 
 Exports . 
 Imports . 
 
 Total. 
 
 1870. 
 Exports 
 Imports 
 
 • • » * • 
 
 Total. 
 
 1871. 
 Exports . 
 Imports . 
 
 Total. 
 
 1872. 
 Exports . 
 Imports . 
 
 Total. 
 
 1873. 
 Exports . 
 Imports . 
 
 Total , 
 
 1874. 
 Exports . 
 Imports . 
 
 Total. 
 
 1875. 
 Exports , 
 Imports . 
 
 Total. 
 
 1876. 
 Exports . 
 Imports . 
 
 Total. 
 
 Declared 
 
 Value of 
 
 Exports and 
 
 Imports. 
 
 £ 
 
 59,000,000 
 85,000,000 
 
 144,000,000 
 
 179,000,000 
 294,000,000 
 
 473,000,000 
 
 189,000,000 
 295,000,000 
 
 484,000,000 
 
 199,000,000 
 303,000,000 
 
 502,000,000 
 
 222,000,000 
 329,000,000 
 
 551,000,000 
 
 256,000,000 
 354,000,000 
 
 610,000,000 
 
 255,000,000 
 370,000,000 
 
 625,000,000 
 
 239,000,000 
 368,000,000 
 
 607,000,000 
 
 223,000,000 
 374,000,000 
 
 597,000,000 
 
 200,000,000 
 374,000,000 
 
 574,000,004 
 
 Increase 
 of Exports 
 
 and 
 Imports. 
 1844=100 
 
 =100 
 
 328 
 
 336 
 
 347 
 
 382 
 
 423 
 
 434 
 
 421 
 
 414 
 
 398 
 
 Amount of 
 Clearing. 
 
 (say) 
 1,500,000,000 
 
 3,466,000,000 
 
 3,602,000,000 
 
 3,904,000,000 
 
 4,777,000,000 
 
 5,903,000,000 
 
 6,161,000,000 
 
 5,916,000,000 
 
 5,647,000,000 
 
 4,959,000,000 
 
 Increase 
 of Clearing 
 since 1844. 
 1844=100. 
 
 t=ioo 
 
 231 
 
 240 
 
 260 
 
 318 
 
 394 
 
 411 
 
 394 
 
 876 
 
 331 
 
 5 
 
 Decimal 
 Proportion 
 
 of Total 
 Exports and 
 
 Imports 
 to Cleariner. 
 
 •96 
 
 •137 
 
 •134 
 
 •128 
 
 •115 
 
 •103 
 
 •101 
 
 •102 
 
 •105 
 
 •116 
 
 * 1844, " Porter's Progress of the Nation," p. 356. The exports of British produce 
 
 include foreign and 
 t The amount passed by the principal banking houses in London at the Clearing House, 
 
 As this fitntfvmo-nt. is f nr 1 R3Q nnrl rlrvAS nnt, inolnrio f.h« Rnnlr rvfJFVnH^T^TTm^li^au^^^^^ 
 
139 
 
 through the London Clearing House, and the total Bank Note Circulation of 
 in the United Kingdom. 
 
 6 
 
 Total 
 
 Bank Note 
 
 Circulation in 
 
 the United 
 
 Kingdom. 
 
 37,3S0,000 
 
 39,750,000 
 
 39,850,000 
 
 40,000,000 
 
 Proportion of 
 
 Exports and Imports 
 
 together to Note 
 
 Circulation. 
 
 Note Circulation = 
 
 42,060,000 
 
 43,630,000 
 
 43,370,000 
 
 43,910,000 
 
 45,382,000 
 
 46,036,000 
 
 (Exports and) o g 
 (Imports, say/ * 
 
 ( Exports and ) . 
 ( Imports, say } 
 
 ("Exports and) 10 
 ( Imports, say / 
 
 /Exports and") , oi 
 (Imports, say) " 2 
 
 /Exports and) -„ 
 (Imports, say/ 
 
 /Exports and | «. 
 ( Imports, say j 
 
 (Exports and) ,,. 
 (Imports, say J * 
 
 /Exports and) .o 3 
 (Imports, say j * 
 
 (Exports and) ,„, 
 (Imports, say j * 
 
 /Exports and) 12 . 
 (Imports, say J * 
 
 8 
 
 Proportion of 
 Note Circulation 
 
 to Clearing. 
 Circulation = 1. 
 
 Clearing, say 40 
 
 Clearing, say 87 
 
 Clearing, say 90 
 
 Clearing, say 97 
 
 Clearing, say 113 
 
 9 
 
 Increase 
 
 in Bank Note 
 
 Circulation 
 
 since 1844. 
 
 ItiU = 100. 
 
 = 
 
 Clearing, 6ay 135 
 
 Clearing, say 142 
 
 Clearing, say 135 
 
 Clearing, say 124 
 
 Clearing, say 107 
 
 106 
 
 107 
 
 107 
 
 112 
 
 117 
 
 116 
 
 117 
 
 121 
 
 123 
 
 Year. 
 
 1814. 
 
 1868. 
 
 1869. 
 
 1870. 
 
 1871. 
 
 1872. 
 
 1S73. 
 
 1874. 
 
 1875. 
 
 1876. 
 
 only are included, as more closely representing British trade than the total exports, which 
 
 colonial produce. 
 
 in 1839, is given as £941,401,600. ("Principles of Monev," by John "Wade, 18i2, p. 79.) 
 
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143 
 
 TABLE P.- 
 
 -Average Rate of Discount for First Class Bills for the 10 years, 
 1825-34 ; 1835-44 ; and the 20 years, 1825-44. 
 
 
 Avernce 
 
 Average 
 
 
 Average 
 
 Average 
 
 • 
 
 A vera ere 
 
 A vera ere 
 
 
 Rate forthe 
 
 Rate of 
 
 
 Rate tor the 
 
 Rate of 
 
 
 Rate for the 
 
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 20 Years 
 
 20 Ye: rs 
 
 
 10 Years 
 
 In Yt are 
 
 
 lit Years 
 
 10 Years 
 
 
 1825—44. 
 
 1825—44. 
 
 
 1825—34. 
 
 1825—34. 
 
 
 1836— 4t. 
 
 lv::,— 44. 
 
 
 £3. lis. lOd. 
 
 =100. 
 
 
 £3. 7s. 7<1. 
 
 =100. 
 
 
 £3. 16s. Od. 
 
 =100. 
 
 
 £ s. d. 
 
 
 £ s. d. 
 
 
 £ s. d. 
 
 
 Jan. 
 
 3 17 3 
 
 107 
 
 Jan. 
 
 3 12 
 
 IO7 
 
 Jan. 
 
 4 2 6 
 
 IOS 
 
 Feb. 
 
 3 11 3 
 
 99 
 
 Feb. 
 
 3 7 
 
 99 
 
 Feb. 
 
 3 15 6 
 
 99 
 
 Mar. 
 
 3 9 9 
 
 97 
 
 Mar. 
 
 3 6 
 
 98 
 
 Mar. 
 
 3 13 6 
 
 97 
 
 April 
 
 3 9 9 
 
 97 
 
 April 
 
 3 7 6 
 
 100 
 
 April 
 
 3 12 
 
 95 
 
 May 
 
 3 7 9 
 
 95 
 
 May 
 
 3 8 
 
 100 
 
 May 
 
 3 7 6 
 
 89 
 
 June 
 
 3 11 3 
 
 99 
 
 June 
 
 3 7 
 
 99 
 
 June 
 
 3 15 6 
 
 99 
 
 July 
 
 3 10 9 
 
 99 
 
 July 
 
 3 6 6 
 
 98 
 
 July 
 
 3 15 
 
 99 
 
 Aug. 
 
 3 8 3 
 
 95 
 
 Aug. 
 
 000 
 000 
 
 93 
 
 Ana-. 
 
 3 13 
 
 96 
 
 pt. 
 
 3 10 9 
 
 99 
 
 Sept. 
 
 3 6 
 
 9 S 
 
 Sept. 
 
 3 15 6 
 
 99 
 
 Oct. 
 
 3 12 3 
 
 101 
 
 Oct. 
 
 3 6 6 
 
 98 
 
 Oct. 
 
 3 18 
 
 103 
 
 Nov. 
 
 3 15 G 
 
 io 5 
 
 Nov. 
 
 3 9 
 
 102 
 
 Nov. 
 
 4 2 
 
 108 
 
 Dec. 
 
 i 
 
 3 17 3 
 
 107 
 
 * 
 
 Dec. 
 
 3 12 
 
 107 
 
 Dec. 
 
 4 2 6 
 
 108 
 
 Average Eate of Discount for the 50 Years 1825 — 1874, £3. 16s. 2d. 
 
144 
 
 TABLE Q . — Average Minimum Rate of Discount Charged by the 
 Bank of England for the Thirty Years 1845-74. 
 
 
 Annual 
 
 
 Average 
 
 
 
 of 
 
 Year. 
 
 minimum 
 
 
 E 
 
 ite of 
 
 
 Di 
 
 sconnt 
 
 
 t'f Bank of 
 
 
 England. 
 
 
 £ 
 
 s. d. 
 
 1845 
 
 2 
 
 13 5 
 
 '46 
 
 3 
 
 6 7 
 
 '47 
 
 5 
 
 1 7 
 
 '48 
 
 3 
 
 14 8 
 
 '49 
 
 2 
 
 19 
 
 1850 
 
 2 
 
 10 
 
 '51 
 
 3 
 
 
 
 '52 
 
 2 
 
 3 3 
 
 '53 
 
 3 
 
 13 6 
 
 '54 
 
 5 
 
 2 3 
 
 1855 
 
 4 
 
 11 8 
 
 '56 
 
 5 
 
 8 7 
 
 '57 
 
 6 
 
 13 3 
 
 '58 
 
 3 
 
 4 5 
 
 '59 
 
 2 
 
 14 9 
 
 1860 
 
 4 
 
 3 8 
 
 '61 
 
 5 
 
 5 4 
 
 '62 
 
 2 
 
 10 7 
 
 '63 
 
 4 
 
 8 10 
 
 '64 
 
 7 
 
 7 1 
 
 1865 
 
 4 
 
 15 4 
 
 '66 
 
 6 
 
 18 11 
 
 '67 
 
 2 
 
 10 11 
 
 68 
 
 2 
 
 1 11 
 
 69 
 
 3 
 
 4 2 
 
 1870 
 
 3 
 
 2 7 
 
 '71 
 
 2 
 
 17 8 
 
 '72 
 
 4 
 
 10 
 
 '73 
 
 4 
 
 16 
 
 '74 
 
 3 
 
 13 9 
 
 Average Eate of Discount for the Months 
 
 January, 
 
 February. 
 
 £ s. d. 
 
 2 10 
 
 3 10 
 
 3 .7 5 
 
 4 18 8 
 3 
 
 2 10 
 
 3 
 2 11 
 2 10 3 
 
 5 
 
 5 
 
 5 10 
 
 6 
 
 5 16 1 
 2 10 
 
 2 13 10 
 
 6 15 5 
 
 2 12 10 
 
 3 12 2 
 
 7 7 
 
 5 12 2 
 
 7 17 5 
 
 3 10 
 
 2 
 
 3 
 
 3 
 
 2 10 
 
 3 
 
 4 10 
 3 17 9 
 
 £ s. d. 
 
 2 10 
 
 3 10 
 
 4 
 
 4 
 3 
 
 2 10 
 
 3 
 
 2 10 
 
 3 
 
 5 
 
 5 
 
 5 10 
 
 6 
 
 3 5 3 
 2 10 
 
 4 
 
 7 10 
 
 2 10 
 
 4 13 7 
 7 5 8 
 
 5 
 7 15 8 
 
 3 2 6 
 
 2 
 
 3 
 
 3 
 
 2 10 
 
 3 
 3 10 
 3 10 
 
 March. 
 
 £ s. a. 
 
 2 10 
 
 3 10 
 
 4 
 
 4 
 3 
 
 2 10 
 
 3 
 
 2 10 
 
 3 
 
 5 
 
 5 
 
 5 10 
 
 6 
 
 3 
 2 10 
 
 4 8 
 
 7 13 7 
 
 2 10 
 4 
 6 
 
 4 10 7 
 
 6 9 6 
 
 3 
 
 2 
 
 3 
 
 3 
 
 2 19 5 
 
 3 
 3 11 7 
 3 10 
 
 April. 
 
 £ S. d. 
 
 2 10 
 
 3 10 
 
 4 13 4 
 
 4 
 3 
 
 2 10 
 
 3 
 
 2 8 
 
 3 
 
 5 
 
 4 12 3 
 
 5 10 
 
 6 9 3 
 
 3 
 2 11 3 
 
 4 16 
 
 5 10 
 2 10 
 4 4 3 
 
 6 9 3 
 
 4 
 6 
 
 3 
 
 
 
 
 
 
 
 
 
 
 
 3 
 
 2 14 3 
 
 3 15 
 
 4 
 3 10 
 
 May. 
 
 £ s. d. 
 
 2 10 
 
 3 10 
 5 
 
 4 
 3 
 
 2 10 
 
 3 
 
 2 
 
 3 
 
 5 5 9 
 
 4 1 7 
 
 5 12 3 
 
 6 10 
 
 3 
 
 4 6 9 
 
 4 11 
 
 5 9 7 
 
 2 12 10 
 
 3 9 
 
 8 4 8 
 
 4 6 9 
 8 18 
 2 19 8 
 
 2 
 4 8 6 
 
 3 
 
 2 10 
 
 4 13 7 
 
 5 3 7 
 
 3 19 4 
 
 
 
 June 
 
 
 £ s. 
 
 d. 
 
 2 10 
 
 
 
 3 10 
 
 
 
 5 
 
 
 
 3 15 
 
 7 
 
 3 
 
 
 
 2 10 
 
 
 
 3 
 
 
 
 2 
 
 
 
 3 8 
 
 7 
 
 5 10 
 
 
 
 3 15 
 
 3 
 
 4 19 
 
 3 J 
 
 6 6 
 
 
 
 3 
 
 
 
 3 4 
 
 3 
 
 4 
 
 
 
 6 
 
 
 
 3 
 
 
 
 4 
 
 
 
 6 10 
 
 7 
 
 3 5 
 
 
 
 10 
 
 
 
 2 10 
 
 
 
 2 
 
 
 
 4 1 
 
 3 
 
 3 
 
 
 
 2 7 
 
 6 
 
 3 11 
 
 
 
 6 5 
 
 4 
 
 2 17 
 
 3 
 
145 
 
 TABLE Q. continued — Average Minimum Rate or Discount Charged 
 by the Bank of England for the Thirty Years 1845-74. 
 
 
 Year. 
 
 
 Average Kate of Discount for the Months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 .July 
 
 
 August. 
 
 September. 
 
 October. 
 
 November. 
 
 December. 
 
 
 
 £ S. 
 
 d. 
 
 £ a. 
 
 d. 
 
 £ s. 
 
 d. 
 
 £ s. 
 
 d. 
 
 £ s. 
 
 d. 
 
 £ s. d. 
 
 
 1845 .. .. 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 14 
 
 2 
 
 3 7 
 
 3 
 
 3 10 
 
 
 '46 .. .. 
 
 3 10 
 
 
 
 3 9 
 
 5 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 '47 .. .. 
 
 5 
 
 
 
 5 7 
 
 8 
 
 5 3 
 
 7 
 
 5 14 
 
 6 
 
 7 14 
 
 7 
 
 5 18 
 
 
 '48 .. .. 
 
 3 10 
 
 
 
 3 10 
 
 
 
 3 10 
 
 
 
 3 10 
 
 
 
 3 1 
 
 3 
 
 3 
 
 
 '49 . . 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 2 18 
 
 
 
 2 10 
 
 
 1850 .. .. 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 11 
 
 
 '51 .. .. 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 '52 .. .. 
 
 2 
 
 
 
 2 
 
 
 
 2 
 
 
 
 2 
 
 
 
 2 
 
 
 
 2 
 
 
 '53 .. .. 
 
 3 10 
 
 
 
 3 10 
 
 
 
 4 3 
 
 3 
 
 5 
 
 
 
 5 
 
 
 
 5 
 
 
 '54 .. .. 
 
 5 10 
 
 
 
 5 1 
 
 7 
 
 5 
 
 
 
 5 
 
 
 
 5 
 
 
 
 5 
 
 
 1855 .. .. 
 
 3 10 
 
 
 
 3 10 
 
 
 
 4 2 
 
 7 
 
 5 8 
 
 
 
 5 10 
 
 
 
 5 10 
 
 
 '56 .. .. 
 
 4 10 
 
 
 
 4 10 
 
 
 
 4 10 
 
 
 
 5 18 
 
 1 
 
 6 15 
 
 
 
 6 8 5 
 
 
 '57 .. .. 
 
 5 15 
 
 2 
 
 5 10 
 
 
 
 5 10 
 
 
 
 6 17 
 
 5 
 
 9 10 
 
 7 
 
 9 11 
 
 
 '58 .. .. 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 3 
 
 
 
 2 11 11 
 
 
 '59 .. .. 
 
 2 14 
 
 5 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 1860 .. .. 
 
 4 
 
 
 
 4 
 
 
 
 4 
 
 
 
 4 
 
 
 
 5 2 
 
 2 
 
 5 
 
 
 '61 .. .. 
 
 6 
 
 
 
 4 14 
 
 2 
 
 3 18 
 
 7 
 
 3 10 
 
 
 
 3 2 
 
 3 
 
 3 
 
 
 '62 . . 
 
 2 11 
 
 
 
 2 
 
 
 
 2 
 
 
 
 2 
 
 7 
 
 3 
 
 
 
 3 
 
 
 '63 .. .. 
 
 4 
 
 
 
 4 
 
 
 
 4 
 
 
 
 4 
 
 
 
 5 15 
 
 5 
 
 7 12 1 
 
 
 '64 .. .. 
 
 6 3 
 
 9 
 
 7 17 
 
 5 
 
 8 14 
 
 7 
 
 9 
 
 
 
 8 2 
 
 7 
 
 6 9 7 
 
 
 1865 .. .. 
 
 3 1 
 
 3 
 
 3 19 
 
 
 
 4 
 
 7 
 
 6 11 
 
 
 6 15 
 
 3 
 
 6 2 
 
 
 '66 .. .. 
 
 10 
 
 
 
 8 14 
 
 9 
 
 5 3 
 
 
 
 4 10 
 
 
 
 4 2 
 
 7 
 
 3 16 5 
 
 
 '67 .. .. 
 
 2 8 
 
 5 
 
 2 
 
 
 
 2 
 
 
 
 2 
 
 
 
 2 
 
 
 
 2 
 
 
 '68 .. .. 
 
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 2 
 
 c 
 
 2 
 
 
 
 2 3 
 
 8 
 
 2 19 1 
 
 
 '69 .. .. 
 
 3 4 
 
 9 
 
 2 17 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 18 
 
 8 
 
 3 
 
 
 1870 .. .. 
 
 3 7 
 
 9 
 
 5 
 
 7 
 
 3 12 
 
 7 
 
 2 10 
 
 
 
 2 10 
 
 
 
 2 10 
 
 
 '71 .. .. 
 
 2 2 
 
 1 
 
 2 
 
 
 
 2 8 
 
 
 
 4 15 
 
 6 
 
 4 10 
 
 7 
 
 3 4 6 
 
 
 '72 .. .. 
 
 3 4 
 
 2 
 
 3 10 
 
 
 
 3 3 
 
 3 
 
 5 12 
 
 7 
 
 6 12 
 
 7 
 
 5 7 9 
 
 
 '73 .. .. 
 
 4 19 
 
 8 
 
 3 6 
 
 9 
 
 3 5 
 
 2 
 
 5 19 
 
 5 
 
 8 4 
 
 
 4 16 2 
 
 
 '74 .. .. 
 
 2 10 
 
 3 
 
 3 11 
 
 3 
 
 3 
 
 
 
 3 10 
 
 3 
 
 4 9 
 
 3 
 
 6 
 
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149 
 
 TABLE R. continued. — Monthly Averages of Bank of England Minimum Rates 
 
 of Discount for 1875 and 187G. 
 
 1S75. 
 
 1876. 
 
 
 
 
 
 Rate 
 
 
 
 
 Rate 
 
 Avev;i 
 
 Rate 
 
 
 
 of 
 
 Average Rate 
 
 
 
 of 
 
 of x< 
 
 
 
 Zear 
 
 of xear 
 
 
 
 Year 
 
 £:i. to. 
 
 Id. 
 
 
 
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 £2. 11*. lOd. 
 
 
 
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 £ 
 
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 £ 
 
 s. 
 
 d. 
 
 
 January . . 
 
 4 
 
 9 
 
 
 
 139 
 
 January 
 
 4 
 
 13 
 
 6 
 
 l8o 
 
 February.. 
 
 . 3 
 
 2 
 
 n 
 
 98 
 
 February 
 
 4 
 
 
 
 
 
 154 
 
 March 
 
 . 3 
 
 10 
 
 
 
 109 
 
 March 
 
 3 
 
 18 
 
 1 
 
 IS 1 
 
 April 
 
 . 3 
 
 10 
 
 
 
 109 
 
 April 
 
 2 
 
 10 
 
 9 
 
 98 
 
 May 
 
 . 3 
 
 10 
 
 
 
 109 
 
 May 
 
 2 
 
 
 
 
 
 77 
 
 June 
 
 . 3 
 
 10 
 
 
 
 109 
 
 June 
 
 2 
 
 
 
 
 
 77 
 
 July 
 
 3 
 
 1 
 
 
 
 95 
 
 July 
 
 2 
 
 
 
 
 
 77 
 
 August 
 
 2 
 
 2 
 
 n 
 
 67 
 
 August 
 
 2 
 
 
 
 
 
 77 
 
 September 
 
 2 
 
 
 
 
 
 62 
 
 September 
 
 2 
 
 
 
 
 
 77 
 
 October . . 
 
 3 
 
 1 
 
 9i 
 
 97 
 
 October 
 
 2 
 
 
 
 
 
 77 
 
 November 
 
 3 
 
 11 
 
 
 
 in 
 
 November 
 
 2 
 
 
 
 
 
 77 
 
 December 
 
 3 
 
 1 
 
 
 
 95 
 
 December 
 
 2 
 
 
 
 
 
 77 
 
 ■ 
 
150 
 
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152 
 
 TABLE T. continued. — Clearing House Keturns 1875 and 1876. 
 
 
 1875. 
 
 
 1876. 
 
 
 Amount of Year, £5,646,993,000. 
 
 Amount of Year, £4,958,963,000. 
 
 Weekly Average, £103,734,000 
 
 = 100. 
 
 Weekly Average, £95,479,000 
 
 = 100. 
 
 Weekly Average in Months of 
 
 Weekly Average in Months of 
 
 January 
 
 £ 
 120,393,000 
 
 no 
 
 January 
 
 £ 
 113,179,000 
 
 118 
 
 February 
 
 123,265,000 
 
 ii3 
 
 February . , 
 
 105,200,000 
 
 no 
 
 March 
 
 120,125,000 
 
 no 
 
 March 
 
 100,144,000 
 
 105 
 
 April 
 
 110,022,000 
 
 IOI 
 
 April , . 
 
 99,104,000 
 
 104 
 
 May 
 
 111,180,000 
 
 102 
 
 May 
 
 97,729,000 
 
 102 
 
 June 
 
 107,083,000 
 
 99 
 
 June . . . 
 
 82,067,000 
 
 86 
 
 July 
 
 105,108,000 
 
 97 
 
 July 
 
 98,854,000 
 
 103 
 
 August 
 
 101,123,000 
 
 93 
 
 August 
 
 86,982,000 
 
 9i 
 
 September . . 
 
 101,075,000 
 
 93 
 
 September . . 
 
 85,778,000 
 
 90 
 
 October . . 
 
 99,905,000 
 
 92 
 
 October 
 
 92,366,000 
 
 96 
 
 November 
 
 106,080,000 
 
 98 
 
 November . . 
 
 93,108,000 
 
 97 
 
 December 
 
 99,452,000 
 
 92 
 
 December . . 
 
 91,237,000 
 
 95 
 
appendix. 
 
 Darin-- the discussion on Mr. Palgrave's paper, the following 
 
 letter from Mr. William Langton was read by the President : — 
 
 Docklands, Ingatcstone, Essex, 
 
 1 2th March, 1877. 
 Dear Mr. Wilkinson, 
 
 I have to thank you exceedingly for the draft proof of Mr. 
 Palgrave's Paper, which will enable me to be with my old friends 
 of the Statistical Society in spirit on the evening of the 14th. 
 
 Time does not permit me to follow the vast mass of interesting 
 detail which is to be laid before you by a gentleman so remarkable 
 as Mr. Palgrave is for his industry and intelligence. 
 
 The history and tabulation of the rates of Discount is a very 
 interesting document ; but in reviewing it sundry things will 
 have to be borne in mind, which will show that it is not so accurate 
 a barometrical guide for the finance of Banking as the record which 
 Mr. Baker continued from my diagram of the differences between 
 the other deposits and the other securities, as shown by the returns 
 of the Bank of England published weekly to the world from the 
 date of the year 1844. I ground this suggestion on the recognised 
 fact that the Bank of England holds the ultimate reserve of the 
 country, and that the pressure of the wants of trade are felt by her 
 in ultimate resort. 
 
 The minimum rate of discount as published by the Bank of 
 England, regulating as it has done more or less the rates charged 
 by Bankers and Brokers, and with certain limitations the allow- 
 ance of interest on deposits throughout the country ^especially sinco 
 the London Joint Stock Banks have advertised the rates allowed by 
 them), requires to be reviewed with certain corrective considera- 
 tions. At one period the Directors of the Bank of England, in fixing 
 their rate of discount, did not act with the same promptitude as 
 they have evinced at another. The action of the demand for bul- 
 lion from abroad, as shown by the foreign Exchanges, was dis- 
 covered to be promptly affected by changes in the rate of discount. 
 This nostrum was occasionally applied apparently without refer- 
 
11. 
 
 cnce to other considerations; while at times, when circumstances 
 caused an inconvenient pressure, the rate was put up with the distinct 
 object of preventing a resort to the funds of the Bank of England. 
 One singular instance of this will he remembered by some of the 
 Manchester Bankers. When an unexpected demand was made on 
 their resources, owing to the revival of business after the American 
 civil war had ceased, the sudden extension of their applications for 
 discount at the Branch Bank of England caused an extra rate to be 
 levied from them beyond what was charged to the general mercan- 
 tile public. 
 
 The notorious disturbance of the bullion reserve in May and 
 November is of course mainly owing to the rather clumsy contri- 
 vance by which the legislation of Sir Bobert Peel in 1 845 sought 
 partially to adapt to Scotland his great principle, applied to England 
 in 1844. 
 
 It would require a special essay to examine all the consequences 
 of the Northern portion of this realm still continuing to be ruled in 
 matters of circulation on principles so different from those which 
 regulate the Banking business of England. There can be no doubt 
 that Sir Bobert Peel, had he lived, would not have suffered this 
 anomaly to continue ; and also that he contemplated the gradual 
 absorption of the local issues of notes in England and the adoption 
 of the principle of a single bank of issue in this country. 
 
 Experience has shown that no evil consequences have arisen 
 from the steps already trodden towards this end ; and I cannot 
 believe that whilst this process has been going on it was in the 
 slightest degree necessary to enlarge the amount permitted to the 
 Bank of England to base its issue upon securities iustead of coin or 
 bullion. 
 
 It is exceedingly natural that those Banks, which still retain the 
 privilege of issuing their own note3, should desire to maintain it, 
 since it naturally adds to their profits ; but it has always been 
 recognised in the great industrial district of Lancashire that it is 
 no essential condition to the wielding of manufacturing and com- 
 mercial enterprise, and that the Banks not possessing this privilege 
 have not stinted their customers of any legitimate accommodation. 
 
111. 
 
 The brief in the cause of the local issuers could uot be held by a 
 more able and iugenious advocate than Mr. Pa] grave. "Witness 
 the 4 lli and 5th sections of his paper. 
 
 Professor Bonamy Trice has ably defined Banking to be " a 
 trailing in debt." The note payable on demand and the deposit 
 receipt are equally evidences of debt and equally unsecured ; 
 therefore equally liable to be reclaimed if the confidence of the 
 public be shaken, or for other cause. But there can be no doubt 
 that in times of commercial panic there is a greater tendency to 
 run for gold by the note-holder than by the simple depositor, whose 
 receipt is not transferable from hand to hand like the note payable 
 to bearer. I am certainly not able to give proof of this assertion ; 
 but I have legitimate grounds for drawing the inference from a 
 circumstance well known within the walls of the Bank of England, 
 and which is evidence of the feeling, not to say fears, of the Banks 
 in question — namely, that in such times the pressure upon the 
 res Qv yes f the Bank of England is much aggravated by the demand 
 for notes and gold by the issuing Bankers. 
 
 One great gain which the public enjoyed since the regulation 
 by law of the issues of the Bank of England is to be found in the 
 circumstance that no fear of the convertibility of the Bank of 
 England note has since then ever caused an aggravation of a 
 commercial crisis. 
 
 Governments are held to be responsible for honestly keeping 
 up the standard of the coins minted by them, and ought no doubt 
 to take measures necessary to protect the public from loss by such 
 representatives of coin as they permit to pass current within their 
 territories. This has now been done as far as the Bank of 
 England note is concerned, but not so in the case of the notes 
 issued by country Bankers. Here I cannot but recognise a defect 
 in our legislation. 
 
 The issue by Governments of paper money practically not con- 
 vertible into coin, especially when extending to small values and 
 the limitation to which is arbitrary on their part, is generally an 
 indication of exhausted finances of the State and of the impoverish- 
 
IV. 
 
 ment of the people ; telling against them most materially in their 
 interchange with other nations, of which the course of Exchange 
 is a most significant evidence. This process was felt in England 
 during the period of Bank restriction, when the Bank of England 
 in its function as a hank of issue hecame the slave of the State. 
 
 The impoverishment of the country and the dearth of coin were 
 amongst other things marked hy the issue of bank tokens and the 
 currency of the Spanish dollar as a five-shilling piece, when the king's 
 head had been stamped upon the pigtail of the Spanish monarch's 
 effigy ; together with the substitution of one and two pound notes for 
 the common use of gold coin. The circulation of the paper repre- 
 sentatives of debt was accompanied in the larger transactions of 
 commerce by transfers from hand to hand of debt in the shape 
 of bills of exchange, which, if drafts of a country bank upon its 
 correspondent in London, or merchants' bills which had once 
 passed through a bank, and consequently bore a banker's endorse- 
 ment, were accepted in payment of produce iu accordance withthe 
 terms of contract. $Lj personal memory of trade only extends back 
 to the year 1820 ; but at that time the Liverpool merchants re- 
 ceived nothing but bills in payment from Manchester of their 
 cotton invoices ; every such payment, if in what was called pro- 
 miscuous paper, requiring a calculation of interest to make a 
 settlement per appoint. This practice gradually disappeared with 
 the resumption of cash payments by the Bank of England and 
 the lowering of the standard rate of interest ; but if economy of 
 interest of money is to be taken as the special recommendation 
 of any particular kind of circulating medium, this one surely 
 ought to bear the palm ! 
 
 By the gradual introduction of free-trade the wealth of this 
 country has been steadily increasing (though occasionally diverted 
 into unproductive speculations) ; and it is no doubt to this cir- 
 cumstance that we owe the enormous increase in the deposits of 
 the banks, and the great impulse which they have given to com- 
 mercial enterprise. 
 
 Yours faithfully, 
 
 WILLIAM LANGTON. 
 
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