was of not less value than the actual payment of the metal, although only a smaller amount of the metal than was promised by the note could be obtained for it! Nine years afterwards cash payments were resumed. In January 7th, 1824, the Bank held £14,200,000 of bullion. By November, 1825, the amount was reduced to £1,300,000. Up to this time the Directors did not apparently realise the possibility of danger, when they suddenly became alarmed, and on their diminishing the circulation forthwith to the extent of £3,500,000, a panic occurred. They applied to the Government to again restrain payments in gold, but the Government refused to do So. They then adopted another policy, and instead of diminishing the circulation they lent by every possible means, and in modes never before adopted. The bullion was reduced to £1,260,890-the notes were all issued-and the Bank was on the eve of suspending payment, when a box containing a quantity of one pound notes, which had been accidentally overlooked when all notes under £5 had been called in, was discovered. That box of paper is said to have saved the credit of the country. In 1836 and 1839 the Bank's position was again jeopardised,

and in the latter year the directors had to resort to the Paris bankers for a loan of two millions. By this time the country was thoroughly dissatisfied with the conduct of banks, and legislation was imperatively demanded. After a long controversy, the Bank Charter Act of 1844 which lays down the conditions upon which bank notes are now issued was passed; the Bank of England was divided into two distinct departments-the Issue and the Banking; and the relations of the Government to the Bank (except as customers of the Bank in the ordinary way) were confined to their responsibility to the Issue Department for the loan due from the country to the Bank, upon the security of which a portion of the notes are issued.

The "City," however, did not appreciate the import of the change effected by the Bank Charter Act 1844 in the relations of the Government and the Bank of England. Men who had been accustomed to look upon the Bank of England as specially privileged; who had seen it empowered to make an unlimited number of promises to pay on demand which it was absolved from the necessity of carrying out; could not realise that it was entirely shorn of its privileges, and that

it no longer had the power to manufacture 'legal tender' with which to assist them in times of difficulty and pressure. The "City" still considered that the Bank of England owed a duty to the public of an altogether different character to that of any other Bank, and the directors of the Bank of England were not backward in acknowledging it. The case of the other banks was placed before the Select Committee on "Commercial Distress" 1847-8 by Mr. R. C. L. Bevan, who was examined as follows:-(Rept. Select Com. Commercial Distress, 1847-8-vol. viii.) :

Query 2384: Do you consider that the Bank directors, appointed by the proprietors to manage their affairs, ought to regulate their affairs to the greatest advantage of their proprietors? No; in that position of public trust which they occupy as holding the public monies, and what are called "private deposits," which are virtually the monies of the public, I do not think they are at liberty to consider only the interests of their proprietors.

Query 2385: Are you aware that when the Act of 1844 passed it was stated in Parliament that the object was twofold; first to create a

bank of issue, and secondly to create a bank of deposit; and that the bank directors should be at perfect liberty to act for their own interest as the directors of any other bank would be? I have often heard that stated; I remember hearing it stated at the time, but I thought it was a very great mistake.

Query 2386: You think that was not a good plan? I think it was most unsound in principle; certainly it was acted upon by the Bank; I think they took those parties at their word.

Query 2389: Do not you consider that the bank directors ought to attend to the interest of their proprietors in the same manner as you would to your own interest? No; because they are a public bank in a way and in a sense in which we are not.

Query 2390: Where is the distinction now that a separation has taken place between the two departments, and that the discount branch is separated entirely from the issue branch? They hold a great many Government deposits.

Query 2391 But they only hold the deposits of the Government in the same way as you hold the deposits of various public companies; they may be greater in amount, but in principle are

not they the same? I think that the Bank are bankers to the public in a sense in which we are not; not only to a much larger amount, but that they occupy a position evidently that we do not occupy, involving a trust which does not devolve upon us.

Query 2392: You consider that to be a trust different from what you as bankers have? I think we have a right to do as we please, but I do not think that the Bank has; if we please to withhold all accommodation we should have a right to do so, but I do not think the Bank have that right.

The Governor of the Bank of England (Mr. James Morris), and the Deputy Governor (Mr. Henry James Prescott), were asked the following questions:

Query 2653: With regard to the banking department in what condition did the Act place you? It placed the Bank of England in the condition of any other bank, except that we were carrying on business upon a much larger scale, and we had also Government deposits to deal with.

Query 2654: It has been stated that the effect of the Act of 1844, was to relieve you