BANK OF ENGLAND.—This institution was projected in 1694, by William Patterson, a Scotsman. The whole of the capital, amounting to oe1,200,000, was to be lent to the Government, who gave the bank its sanction and support, with the result that within ten days from the date of the opening of the bank the capital was fully subscribed. In July 1691, the bank received its first charter, which was to continue for eleven years certain, or until a year's notice after the 1st August 1705. Since then there have been numerous further and supplementary charters until, in the year 1844, was passed the Bank of England Charter Act, which remains to this day the sanction and protection of the bank ; and during this period the loan to the Government periodically increased until, in 1844, it reached the amount of 111,015,000, at which figure it still remains. So soon as two years after its establishment, the bank became financially involved, and was obliged to even sr.spend payment of its notes. The Government, however, came to its assistance, and the above state of affairs was not repeated until 1797. In that year the Bank Restriction Act was passed, which required the bank to temporarily suspend payment of its notes in gold. This Act was as much an act of justice by the Government as the result of necessity, for the difficulties of the bank were, and have generally been, the result of the financial operations of the Government. In 1819 a Bill was passed, commonly known as Peel's Bill, which provided for the gradual resumption of cash payments. This. Act provided that the Bank Restriction Act should continue in force until the 1st February 1820, after which, by certain gradual steps, an absolute payment in specie should be arrived at on the 1st May 1823; the bank, however, anticipated this latter date by two years.
In 1832, a committee of the House of Commons was appointed to report upon the expediency of renewing the charter of the bank, and into the system on which the banks of issue in England and Wales were conducted. The report of this committee contained the opinions of the highest authorities in questions of political and financial science, as well as the experience of practical men, and it authoritatively established the principles of sound banking. It was with this report before Parliament that the charter was renewed for ten years from 1834, and the Bank Charter Act of 1844 subse quently passed. By the Bank Charter Act the issuing and banking functions of the Belk of England were separated, its issue of notes strictly limited, and a different system of account and staff of officers allocated to each department. The bank could issue notes on a fixed amount of securities to the value of /A 4,000,000—being the before-mentioned Government loan of £11,015,000 [ld certain other securities incidental to the lapsed note-issue of other banks amounting to nearly £3,000,000. The next point of im
portance in the Act is the absolute prohibition of any new bank with a power to issue notes, and the limitation of the issues of all then existing banks of issue to an average of the circulation of each bank for the twelve weeks preceding the 12th April 1844. It was further provided that joint stock banks in London might accept bills for any period, instead of such bills being confined to dates of not less than three months. By the Bank Act, 1892, provision was made for the grant of a supplementary charter to regulate the internal affairs of the bank.
Since 1811 there have been a very considerable series of lapses in the note issues of other banks, and by this means the authorised circulation of the Bank of England has increased from £14,000,000 to nearly £18,000,000. The note-issue above the amount authorised is required to be backed by certain reserves, as to which reference should be made to the article on the BANK RETURN, and a statement of affairs is required by the Bank Act to be published every week. The bank has not an absoi:Ke monopoly in the issue of notes. Any other bank which on the Gth May 1844 was lawfully issuing its own notes, and has done so continuously since then, may continue so to do, but its issue is limited to the average amount of its issues in October 1814.
The Bank of England is managed by a governor, a sub-governor, and twenty-four directors; it fixes the rate of interest [see BANK-RATE], and takes charge of the moneys of the Government ; it holds the cash-reserves of the other banks of the country, and has practically assumed the position of protector of our financial system. As such it moves the bank-rate, cir culates gold or withdraws it from circulation, lends money to th.2 public, and by these means or others aids the money-market and general credit in times of panic and crisis. As a private hank, it opens accounts with the public ; gives out cheques in books ; permits cheques to be drawn upon it for any amount not less than L'5 ; pays bills payable at it, with or without advice by the customer, according to its arrangement with the latter ; takes in boxes for safe custody without requiring to know their, contents ; and receives dividends by power of attorney.
The bank manages the banking business relating to the National Debt, and it holds the funds paid into court. Unless a person can show that he has a bond ilde interest in some unclaimed stock, the bank is not bound to shows to him its register of stockholders. See also BANKER AND CUSTOMER ; BANK NOTE.