The Sun.
London, England, 1844-05-08 00:00:00

ment, in any new renewal of the charter of the Bank, is one
that the Bank can be scarcely less interested in ;ban the
Government, namely, that of placing the monetary
system of the country on a sound foundation. I
It appeared highly desirable that any arrange ent
that might be made should be founded on the basis of entire
separation of the, business of issuing notes from that of bank-
ing ; that might be obtained by some public department:
being established for the issue of notes, independent of the
Bank ; bift her Majesty's Government are willing to con-
sider whether this might not be effected by dividing the busi-
ness of the Bank. The first question for the Bank to consider
is, how far they would be willing to undertake this duty,
how far they would be disposed to administer the functions
of issue. It is desirable that the Bank should have the
power of issuing- a certain amount of notes, and that all other
notes should be issued either in exchange for bullion, or
upon securities that -would admit of ready convertibility, and
not to exceed the amount fixed except under the approval
of the Government. It was proposed from henceforth to
prohibit the establishment of any new bank of issue, to re-
strict the issue of their own notes to those banks at present
exercising that privilege, and to limit the issue of those
banks to the amount of notes issued by them on the average
in a given preceding period; and in the event of their failure
of liquidation to prohibit, under any -circumstances, the re-
sumption of their own circulation. The void created by the
withdrawal of any existing private or joint-stock hank from
circulation, either voluntary or under the circumstances al-
luded to, should be supplied, if necessary, by the
substitution of notes of the Bank of England ; • and
in such a case the Bank, acting in concert with
the Government, should be authorised to make
a proportionate increase in the amount of those securities"
which constitute the foundation of the issue of paper—the
whole nett profit derived from that additionaliissue would be
carried to the account of the Government.—(Hear.) It was
intended that a weekly publication should take place of the
state Loth of the issue and of the banking department of the
Bask; and it would be required that each private bank and
joint-stock bank issuing their own notes should make once a
week a publication of the amount of their notes in circula-
tion. tinder such an arrangement, it was obvious the Bank
would not merely retain its existing privileges of having no
bank of inure than six partners issuing notes within a circle
of sixty-five miles of London, but it would be secured
against competition from any new bank, even with
less than six partners, and although any profit derived
from any increased issue would be placed henceforth to the
account of the Government, and the Bank would not derive
any immediate pecuniary advantage from it, yet the - ex-
tension of business and circulation consequent ou that further
extension, must be to the Bank a source of no inconsiderable
benefit. It was not proposed to continue the prohibition
now in force as to the drawing, accepting, or paying of bills,
within the 65 miles circle round London. Should any ar-
rangement on this principle meet the views of the Bank, the
points retraining for consideration would be the period for
hich the Bank charter should be renewed, and the amount
of the payments which ought to be made by the Bank to the
public during the period of its continuance. , The Govern-
ment considered it advisable that the charter should be
granted for ten years from the Ist of August, 1845,
determinable at any period within that time upon a notice of
twelve months; but until such notice be given to continue in
force. The amount of payments to be made to the public by
the Bank would depend upon the consideration of the
benefits secured by this arrangement to the bank-
ing department of the Bank, and in proportion to
the profits of issue which the public were entitled to
claim. The Bank should retain the management of
the public debt, and the advantage of the Government
deposits, and the balance of the several public accounts at
the Bank. It must, however, be distinctly understood that
the Government retained the entire discretion as to the amount
of such deposits to be made in the Bank. With reference
to the profits of the circulation department, supposing the
amount of securities to be fourteen millions, the profit would
be the difference between the interest received on those se-
curities and the expense required for managing the issue of
notes, and treating the accounts connected with them, and
the receipts and credit of the bullion which must from
time to time come into the hands of that depart-
ment. Assuming three per cent. as the rate of in-
terest, the gross profit of the circulation depai tment would be
420,000/. It had been stated by the Batik, in a paper pre-
sented to the Committee on the Bank charter in 1832, that
the expense of the circulation was at that time 106,000/. It
would be desirable that the items constituting this aggregate
sum should be separately considered with a view td ascer-
taining whether, without dimi&shing the advantages now
secured to the public, a reduction might not be effected in the
amount. He would assume 100,0001. as the expense, and
that would leave 320,000/. as the profit of the circulation de-
partment, from which should be deducted 60,0001., the amount
of stamp duty paid on the notes of the Bank of England,
and also whatever sum the Bank allowed to other banks
which substituted Bank of England notes for their own
paper. He would take that amount at 20,0001. The nett
property therefore which the public would have a right to
share would be 240,000/, or if it were more desirable to re-
move the stamp duty on the notes of the Bank, it
would be 300,000/. In this arrangement he did
not put out of view the claim of the Bank for
remuneration for the management of the circulation.
It appeared to him that the real interests of the Bank would
be promoted by the proposed arrangement. It proposed to
leave the management of the circulation in the hands of the
Bank, which would continue the confidence of the public in
it, and would be calculated to increase the control of the Bank '
over the paper and currency of the country. and would secure it
from the expenses and danger to which it wait itherto exposed.
The Deputy-Governor then read the reply the Directors,
dated the 30th of April, 1844, and addressed to the Chancellor
of the Exchequer. After acknowledging the receipt of his
letter, they stated that they were desirous of an early
settlement of the currency question, and were disposed
to consider favourably any measure of her Majesty's Ministers
which would place the circulation of the country on a sound
footing. They had no objection to the separation of theiSsue
and banking departments, and thought that such a separa-
tion could be effected without difficulty. They had no
difference with regard to the principle of the in-
tended measure. The Bank had no pecuniary interest is
the general adoption of their notes. When, in 1835, they
agreed to pay the public 120,0001., advantages were held
out to the Bank from the extension of the circulation of their
notes, but those advantages had never been realised. With
regard to the weekly publication of the amount of issues,
there was no objection on the part of the Bark to accede to
such an arrangement. With regard to the renewal of the
charter from the Ist of August for ten years, it was proposed
that the charter should terminate upon twelve months no-
t ice being given. They would propose that, if such notice was
not given at the end of ten years, th e charter should continue for
ten additional years. This would give the Bank increased se-
curity, and it would put an end to the annual diseussionswhich
were held on the subject. With regard to the advantages
which the Bank derived from having the deposits, the benefit
was diminished in consequence of the risk of forgeries.—
(Hear.) The benefits which the Bank derived were also
diminished from the expenses and risk they incurred in col-
lecting the ordinary revenue. In 1843 the clerks of the Bank
travelled over 75,090 miles, and carried with them 9,049,0001.
The Bank Incurred all the expense and risk of this—(Hear)
—they therefore thought that some abatement of the
120,060/. paid to the public might be reasonably expected.
The Governor thought it necessary to explain that there
was a mistake as to the expense of issues. Instead of
113,000/. it was found to be 117,000/, as the branch bank
at Leicester was not included.(Hear.) He had next to
request the attention of the Court to a letter addressed to the
Directors on May 2, by the Chancellor of the Exchequer. The
letter acknowledged the receipt of the reply of the Directors
to his former letter of April 30, and expressed the satis-
faction of her Majesty's Government to know that on the
part of the Bank there was a general concurrence in the
principles which in that letter he (the Chancellor of the Ex-
chequer) had laid down. It was satisfactory to the
Government that although the Bank Directors doubted
the utility of a weekly publication of the accounts
of the Bank, yet they made no objection to it.
Her Majesty's Government were of opinion that such publi-
cation would be useful, by giving satisfaction to the public
and increasing the confidence in the stability and good ma-
nagement of the establishment. He (the Chancellor of the
Exchequer) agreed with the Directors, that the removal of
the existing prohibition of issuing bills within the
sixty-five miles' circle round London might lead to
the introduction of new paper, and be liable to abuse. He did
not think, however, that it was necessary now to make an
attempt to limit the amount of bills to he issued, and the
times'of payment ' • but considered it preferable to leave with
the Government the power of calling on the Legislature to
interfere, if any abuse should arise. The Chancellor of the
Exchequer thought also that it was better that the new
arrangement should be made terminable at the end of ten
years, then that it should be extended to twenty years. Indeed,
-lie believed that it would be more conducive to the perma-
nence of the arrangement, as there would be a greater likeli-
hood of calls for a change in the course of the period, if it
were fixed at twenty years. Her Majesty's Government pits.
posed to accept of 60,000/. in lieu of the stamp duty, which
would make the whole amount paid by the Bank to the public,
in return for its privileges, 180,000/
The answer of the Court of Directors to the last communi-
cation was then read. It was dated the 3d of May, and, after
acknowledging the receipt of the letter of the Chancellor of
the Exchequer of the 2(1 May, the Directors, in their answer,
stated that, although they were of opinion that some abate-
ment in the payment of the 180,000/. might reasonably have
been expected, they had resolved,; however, under all the
circumstances, to recommend the Court of Proprietors to
accede to the propositions of the Government.
The Goys:axon had now read the whole of the correspond-
ence with the Government on the subject of the renewal of
the charter„ and at the proper time it would be his duty to
submit to the. Court a resolution similar to that one which had
been submitted to the Court on a similar occasion in
the year 1833, viz., that the Court of Directors having taken
the subject into their serious consideration, do recommend
the Court of Proprietors to accede to the proposal of her
Majesty's Government for the renewal of the charter, and
' for providingthe general regulations referred to in the letters
of the Chancellor of the Exchequer, as soon as they should
be proposed to Parliament to he adepted. lie had now tint
them in full possession of all the proposals which her Ma-
jesty's Ministers had made on the subject, and as they had
been submitted to Parliament, the time was come for taking
the opinion of the Court of Directors on the subject.
In answer to some questions, the Cmanarax stated that
the payment of stamp duty would remain nearly as it did at
present; that any advantage to be derived from thee porfoosptheeer•
tive substitution ofßank of England notes for those
banks of issue, would be derived solely from the fact that the
circulation would be on a sounder footing, and that they
would be less embarrassed in the keeping of the banking
accounts.
Mr. FIELDER considered the terms proposed by the Go-
vernment most harsh and unfair. There were stringent re-
gulations for the Bank, but none for the Government or the
private banks. They were to be limited as to their profits,
but not as to their losses. It should be remembered that
they hail met with losses heretofore; that they had come
forward to assist Government frequently, and frequently at a
loss. They had come foravard in 1835, and by an immense
advance had saved the country, and now, because the Go-
vernment had managed by imposing an income-tax in peace
to raise the funds to par, they turned round upon the Bank
and threatened to crush them if they did not accede to the
terms. The Government had not, acted in the fair, open, and
candid
atsome
manner in which they ought to have acted. He hoped
i
...time alteration would be made in the plan before it was
acted on.

31r. WILLIA.Ntsox asked if it was understood that the
be paid to the Government?
was
the outside of what was to
- 120,000/., and the Como/. ,
3Tihre
‘GovENE-EDnorNGonadstvaetret(eldthtaet
theicoursetwas taken by the Board
as renewed in 1833 ;
whentheitthper
Bankiilted andccharter
distributedr among the weretohfeDpiarpeeetorsrs:ter ~•
Pro-
prietors, and time allowed for their consideration.
recom-
mended that the same course should beration. lie
present occasion. There was one thing that he
on the
to see introduced into their charter—that was,eanshould wish
alteration
in their mode of election, particularly with respect to the
elec-
tion of the Chairman and Deputy-Chairman. The
present
mode was one of nomination, which he thought was not re-
spectful either to the Directors or the Proprietors.
The GOVERNOR said, that when he read the resolution,
he stated that it would be . submitted to the Court in
due time. Neither himself nor the Board of Directors
had the slightest objection to postpone the discussion. He
would state that measures would be taken to have the papers
printed and in the possession of the Proprietors to-morrow.