The Manitowoc pilot. [volume] (Manitowoc, Wis.) 1859-1932, 1867-03-29
The Bank of England.

The following will, no doubt, be of inter
est to our readers 1t is an extract from
new work entitled The principles of Bank
ing, by Thomas Hanlcy, Esq. NJ. p, for
merly Governor of the Bank of England
NOTES AND GOLD.
Every note presented at the Bank of
England for payment must be Immediately
paid in gold coin but as it was known that
the wants of the community in this country
were such as to require, for the ordinary
trade, from seventeen to twenty million
pounds of Bank OF England notes to be al
ways in circulation, the bank was permitted
to make use of, at first fourteen and after
wards of fifteen million pounds of their own
notes By investing them in securities, so as
TO make interest; which interest the Bank
was to retain for its own use, and this en-
abled the Bank to pay, and the nation had
claim to exact payment for such prvi-
lege, which payment now amounts tonearly
GOO, 900 a year-the profit which the ma
ton derives from the issue of Bank of Eng
land notes. Beyond this sum of fifteen mil
lion pounds, the Bank is prohibited from
issuing single bank note without having an
equivalent sum in gold in its vaults, and it
is compelled to publish weekly an account
of the gold so held. The profit derived
by the Bank from the issue Of bank-notes
| have stated in my lecture to be about
81 900, 600 per annum-it is somewhat less
whilst, as have all ready shown, the
Government receive double the amount
made by the Bank The Bank profit is de-
rived from the interest on the investment
Of fifteen million pounds at three per cent,
per annum, after deducting the expense OF
manufacturing and issuing and exchanging
its notes, issued not only in London, but at
its ten branches in the country. L have al
ready stated that the Bank is bound at all
times to pay all its notes, when presented,
in gold 1t has frequently been asked how
this could be effected when fifteen million
pounds of such notes are not represented
by gold in hand, but have been invested In
securities. The mode is very simple. Sup:
posing that all the notes outstanding beyond
fifteen millions were presented for payment,
the gold in the Bank reserved for that pur-
pose would have effected this operation
but before the amount was reduced to tit
tesn millions, indeed long before, the Bank
would commence to realize its fifteen mil.
lions of securities. Four million consist OF
securities perfectly saleable at all times
the remainder, viz, eleven millions, has
been lent to the government. If there was
any need of that money, the Chancellor OF
| the Exchequer would not have the smallest
difficulty in tuning the Bank debt into
three per cent. stock, which would be put
into the names of the Governor and Com.
pany of the Bank of England, who would
sell it as required, receiving for all such
sales their own notes, which, not being re-
quired to be re issued for the purposes Of
circulation, would be completely cancelled
and so when all the securities were realized,
and all the outstanding notes paid off, this
part of tie function of the Bank of Eng
land would be terminated; and thus, be il
observed, all its bank note liabilities would
have been discharged without any distur-
| bance Of its other business, or without hay
ing touched shilling of the capital.