Page:The Bank of England and the State, 1905.djvu/19

 and joint stock later on, were bound in a process of natural evolution to come into being, and in their growth to fulfil the functions which one would have expected a bank with such immense resources and such privileges to perform. At first the Bank of England allowed interest on deposits, and even the goldsmiths appeared to have availed themselves of these facilities; but for how long this system prevailed I am not in a position to say. The chief sources of profit were advances to the Government and the raising of money on Bank-notes.

How great was the pressure exerted by the Government is apparent from the Act of 1792, declaring that the Bank should not be subject to any penalties for advancing money to the Government for the payment of bills of exchange, accepted by the Commissioners of His Majesty's Treasury, and made payable at the Bank. (The amount of the sums so advanced was required to be annually laid before Parliament.) According to their original Charter, the Bank had been prohibited from lending money to the Government without the consent of Parliament under a penalty of three times the sum lent, one-fifth part of which was to go to the informer.

Then came the memorable year 1797, when Parliament not only authorised, but ordered the Bank not to pay its notes in gold, a. restriction which was not removed until 1819, when Sir Robert Peel's Bill was passed, authorising the resumption of cash payments.

We can but briefly indicate the banking legislation which took place in subsequent years, information on which is very easily accessible. In 1826 it was decided that the Bank of England should establish branches in different parts of the country, but to what limited extent this has been carried out we all know: the main object of establishing such branches appears to have been to promote the circulation of the notes of the Bank. A further Act, passed in that year, authorised the establishment of joint stock banks with unlimited liability at a greater distance than 65 miles from London, provided they had no establishment in London, and they were prohibited from issuing notes within the