Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1901-05-08

that new deposits would be entirely
stopped for a time and withdrawals
would be very large. In such a crisis
the government would be seriously en-
barrassed to meet general demand for
Withdrawals. If it were to sell bonds at
such a time the price would be driven
down alarmingly. 1t is therefore con-
tended that the duty Of the government
Is to maintain a substantial savings
bank reserve.
The charter under which the Bank Of
England Is now operated was the result
Of a reform in the administration Of the
bank effected in 1874, when Sir Robert
Peel was prime minister. The bank
was founded nearly two centuries ago,
when banking was in its infancy and
the modern economic organization Of
the world had not taken shape. The
original charter underwent no material
alteration for a century and a half.
In 1874 it was felt that a change was
imperatively needed. At that time
Great Britain was the only important
colonial and manufacturing state. The
financial arrangements which had
worked we'll for so long time seemed
to be no longer adapted to new circum-
stances certainly not in a country
which had become the banking center
of the civilized world. While Sir Rob-
ert Peel was an able statesman in
many respects, he was not a financier.
Within three years the new charter
which the government gave to the
Bank Of England at his instigation had
to be suspended. The wealth Of the
British people, however, despite their
defective banking system, accumulated
with astonishing rapidity. The econo-
mic predominance of Great Britain was
so we'll established that the nation was
slow to recognize the shortcomings OF
Sir Robert Peels measure. Three times
since it was amended the bank charter
act has been suspended. In the main,
however, the directors have obeyed the
act in the spirit as well as the letter.
The provisions of that act briefly stated
are as follows:
The issue Of notes Of smaller denom-
nations than G5 was prohibited, the
Bank of England being thereby depriv-
ed of the most profitable part of its
circulation, and it's notes being rendered
entirely useless to nine-tenths Of the
population. The authorized circula-
ton" of the bank-the notes issued
against government securities-Was
vigorously limited. Beyond the author
| lied circulation the bank was required
to hold gold against every note 1t Is
sued. It was forbidden to issue single
note in excess, no matter what the con-
sequences might be to the trade OF the
country. Lastly, the bank was divided
into two separate departments-an is
sue and a banking department. In the
former the gold guaranteeing the cir
culation was held, and preference was
given to the noteholders over the other
creditors Of the bank. The act did not
require the keeping Of an adequate
reserve nor even indicate what an ade-
Quate reserve WOulu De. III Sloi I, o'
the correspondent Of the Chicago Bank
er pithily observes "the directors were
left free in the banking department to
act prudently or to muddle, as might
seem good to them, while their hands
were tied tightly in the issue depart
ment." If Great Britain, concludes this
English financier, still had the econo-
mic pre-eminence she held half CEN
tury ago, or if the Bank of England was
a real bank, in the sense that the Bank
of France is, the country might still
hope to pull through somehow. But, he
adds, "our banking system Is anti
quated and living upon it's prestige.
We shall be lucky, indeed, if we succeed
in avoiding disaster" This British fl
nancier may be more pessimistic than
the situation warrants; but his admis-
sions are highly significant. The "Old
Lady of Threadneedle Street" is two
centuries old At so advanced an age
1t is possible that she may be begin
ming to show signs Of senile decay.