Appended is a copy of a weekly return of the Bank of England: The Private Bankers.— During the 18th century all the banks in England, with the ex ception of the Bank of England, were private partnerships, the number of partners being lim ited by an act passed in 1708 to six. Now, how ever, private banks are very few in number, and their influence is a diminishing one, though at one time that influence throughout the country was great, both socially and politically. The London private bankers ceased to issue notes toward the end of the 18th century, but the country private bankers attached great import ance to their note issues up to the time when the Bank Charter Act of 1844 made further extension in this direction impossible. Many of these firms were under-capitalized; the banker was often a tradesman as well, and was too much at the mercy of fluctuations in trade. Consequently in time of monetary stress fail ures were frequent, especially during the early half of the 19th century. Except that their note issue is limited by the Act of 1844, the law im poses no restrictions upon private bankers, and they are not even compelled to issue balance sheets, though in most cases this has been vol untarily done of recent years. In spite of this absence of control, the existing private banks inspire a confidence which seldom proves mis placed. Most of them have been established for many years, for it has proved increasingly difficult for a new private bank to obtain a foot ing in the country. All banks possessing more than 10 partners must now register as a com pany under the Companies Acts.
The Joint-Stock Banks.— Owing to a clause in the Bank Charter Act of 1708, joint-stock banking was not possible during the 18th cen tury, but in 1826 the Bank of England monopoly was so far curtailed as to allow joint-stock banks to be established, with the right of issu ing notes, provided they had no office in London or within a radius of 65 miles. By an act passed in 1833, joint-stock banks were permitted within this radius, provided they did not issue notes, and under this act several of the leading joint-stock banks of to-day were founded. The legal disability to issue notes continues until the present day, and has had a marked effect on banking in England. The energies of the joint-stock banks have naturally been centred upon the development of deposit banking, with the result that the habit of keeping a banking account has spread more rapidly and more gen erally than in most countries, and the use of notes has correspondingly decreased. Prac tically all the existing joint-stock banks have registered under the Companies Acts with lim ited liability, and in most cases with a reserve of uncalled capital which cannot be utilized ex cept in case of liquidation. During the last 30 years or so a decided tendency has shown itself, on the one hand, for the amalgamation of the private banks and the smaller joint-stock banks with the more powerful of the latter class, and on the other hand for the spread of branch banking. This has resulted in an in creased centralization of the banking system in London, and to a lesser extent, in a few of the leading provincial towns, and in the evolution of a system which is in distinct contrast to that existing in the United States of America. The natural consequence is that the magnitude and importance of the individual bank has very greatly increased. Yet, large as the liabilities of the leading banks to the public are, their capital, both nominal and paid up, and their reserve funds, are sufficiently ample to remove any feeling of distrust which might otherwise be inspired by the volume of their obligations, as will be seen from the accompanying figures taken from the balance sheets of a few of the most important joint-stock banks.
lapse, and it amounts at the present time to f18,450,000. Any notes issued in excess of this total must be secured by the deposit of coin or bullion to an equal amount. Silver may form not more than one-fifth of this deposit, but the bank has but seldom availed itself of this privi lege. As the Issue Department is compelled to buy all standard gold bullion offered to it at the rate of /3 17s. 9d. an once, and always issues notes against the stock in hand, it can be seen that the amount of notes issued is controlled to a very small extent by the bank directors, and that it increases or decreases according to the amount of gold imported or exported.. The Bank of England is, however, not prevented from offering a higher price than the above, should it find it advisable to compete for gold in the market; and in selling gold, if the de mand is for foreign coin or bars, the bank can fix its price according to the demand. Any notes not required in active circulation are held in the Banking Department and form the greater part of the Bank of England reserve. The active circulation is in normal times pecu liarly steady, averaging about L30,000,000 out of a total issue of from 1.55,000,000 to 1;60,000,000.
Note Issues.— The Bank Charter Act of 1844, which governs the note issues of English banks, aimed at the eventual extinction of all note issues except that of the Bank of England. This aim has now almost been realized, for at the beginning of October 1916 only nine banks possessed the right of issuing notes, the maxi mum authorized issues amounting to but L334,820, and the actual circulation being f121, 329. By this act the Bank of England was authorized to issue from the Issue Department L14,000,000 of notes, covered by government securities, i11,015,000 of which consisted of the government debt to the bank. This fiduciary issue could be increased, if authorized by an Order in Council, by the addition of two-thirds of the authorized issue of any other bank which forfeited its right of issue or allowed it to Bank notes have been in England largely superseded by the general use of checks by the public, and the demand for an elastic currency has never assumed such proportions as in the United States. In times of stress, however, the demand for notes has, in a few instances, ex ceeded the bank's power of issue, and on four occasions, in 1847, 1857, 1866 and on the out break of the European War in August 1914, the government has been compelled to inter vene and suspend the clause forbidding the issue of notes beyond the fiduciary limit, except against the deposit of gold. Bank of England notes, which it may be noted are legal tender in all payments except by the bank and its branches, are not issued for any sums below L5, though proposals have frequently been made, notably by Viscount Goschen in 1891, to au thorize the issue of fl notes. Since the out break of war in 1914 fl and 10 shilling cur rency notes have been issued by the British treasury; they are legal tender and convertible into gold on demand at the Bank of England. The amount in circulation on 4 Sept. 1918 was 1270,352,568 in currency notes and certifi cates. Against these the sum of 128,500,000 was held in gold.