The news & observer. [volume] (Raleigh, N.C.) 1894-current, 1903-06-28
The Bank of England.
(The New York Commercially

OF enemies the Bank Of England has
had plenty and, as with most enemies, dis
Iinterestedness was not one Of their dis
tinguishing qualities. The supporters OF
the Seaarts hated the bank because they
saw in its establishment another blow to
their cause and the private bankers de-
tested the Old Lady because they clearly
recognized that, were her career success
| full their own questionable methods
would be exterminated-th that, In short, 1T
would be impossible to obtain from 10 to
| 20 per cent. per annum on their loans and
| that order, instead of the confusion which
| they found so profitable, would be IN
| troduced into the London money market.
The objection of the Tories was polItl-
| cal. That of the goldsmiths ana private
| bankers was actuated by selfshness and
| love of greed; but both parties, 1T Is need
less to add, dsclaimed all Interior motives
and based their objections solely on the.
public good. Their philanthropy was dis
| tinctly modern, and the public was well
| rid of both of them.
| The Bank speedily changed the aspect
OF the money market to the very great
advantage of the public, for, II the banker
| or money lender charge the trader high
rate Of interest upon his loan, it follows
that the trader must in turn add the
charge to the cost of his goods; hence his
customers are directly debited with ex-
cesslve bankers interest. So early as 1713
the competition of the Bank had reduced
the market rate below the legal rate
which, in consequence, was in that year
| lowered from to 5 per cent. per annum.
England, in short gained the same adj
yantages from the establishment of the
Bank of England as did the Dutch from
/ that of Amsterdam. and both the mer-
chants and the public soon began to reap
the benefit of low market rates OF interest.
| Internationally. then, the Old Lady of
Threadneede street, though she has COM
united many follies, and been in numer-
Gus tight corners, from which she has in
yariably extricated herself without
strain upon her honor, conferred a boon
upon the merchants of England when she
routed the Tories and private bankers in
1894, and thereby made the market rate
OF interest dependent upon demand and
supply instead of, as had formerly been
the case, upon a cabal of goldsmiths and
private bankers who combined to keep up
the rate, to the detriment of the trade
OF the country.
| III 1908 the Bank. which had met with
certain opposition, was granted the mono
poly of joint stock banking in England,
and the number of partners in private
banks was limited to six. Nor was it
until 1857 that the number was extended
to ten. The population of London in the
seventeenth century amounted to about
half a million, so the Banks monopoly
did not at first clash with the interests of
the community; but at the beginning OF
the nineteenth century, when London
was a huge city, its evil effects sooil be-
came apparent, and its abolition cry
ing necessity.
BY limiting the partners of private
banks to six those houses were effectually
Handicapped in the race for business and
the Bank of England, being quite unable
to meet the growing requirements of the
country, the government was at length
compelled to cancel its monopoly This it
did by easy stages, and in a manner which
clearly proved that it was dealing with a
Question which it understood only imper-
fectly.
From 1908 to 1914 we get the battle
Of the notes, and from 1926 to 1914 we
have the battle of the banks. The Bank
until 1896, did not possess a single branch
out of London, where it far outdistanced
its rivals, the private bankers, who. con-
sisting of small firms, each the competitor
of the others, were unable to check the
progress of a large banking institution
that enjoyed the confidence of the govern
ment and consequently of the country.
The Bank of Engands notes, therefore,
soon drove those of the London private
bankers out of circulation, and by about
1882 there was not single banker in Lon
don who issued his own paper. The Lon
don bankers kept accounts with the Bank
81 England, issued the Banks notes, and
grouped themselves around that corpora
ton Here we find. for the first time in
the history of England finance. a well
constructed money market. in which those
persons whose credit was good could Dor
row money at rate of interest that was
to a great extent regulated by the sup
ply of loanable capital in the market.
and the demands of those persons who
were anxious to borrow.
| As rule, the disturbing influence gen
orally arises within the home circle: but
in this instance we shall see that it came
from without, and that the Old Lady and
the private bankers were a comparatively
Happy family, though either strangely
ignorant of, or else supremacy Indifferent
| to, the urgent requirements of the times
| The London bankers did not allow inter-
est on deposits; nor did they encourage
small accounts. 1t follows, therefore,
that the small tradesman, who could not
keep banker used bank notes and coin
instead of cheques. and that his wants
were entirely neglected by the private
bankers, who apparently thought him
beneath their notice, though they lived
| to discover that those banks which dive
into the heart of the masses accumulate
vast deposits. and that in reality they
had neglected to farm field which would
have given them splendid returns and
abundant working resources.
! No definite information has been coll
lccted with reference to the rise of private
banking in the provinces, but it is be-
| loved that very few country banks were in
| existence before 1850 The roads were in