El Paso herald. (El Paso, Tex.) 1901-1931, 1911-10-16
BANK Of ENGLAND
ANDITSIHFLUENGE
In 1t Is the Best Possible
Example Of Banking
Development

washington, D. c., Oct. 1.-THE ma
tlOual monetary commission mas pub
lished a translation Of DR.. Eugen Won
PhiIiDDovich's The Bank OF England
and rs Financial Services to the State,
which, though well known to students
Of banking has hitherto only been ac-
Cessible in the German language. Dr.
PhiliDpOvich does not study the Bank
of England as q factor in the economic
growth OF the nation, but rather the
"rCsltfons between the bank and the
English financial administration, and
the form which they present today
Some banks, Of which the German
Refchsbank and the Bank OF Japan are
examples have been organized out Of
hand by legislative enactment 10 ala
In the administration OF government
finance and to provide banking re-
sources for industry and convenience.
The origin Of the immense powers OF
the Bank Of England was quite differ
emf. Although the Bank Of England
was founded in 1884. IL did not gain Its
present intimate connection with gov
eminent finance until the 18Th century
The present powers Of the bank were
acquired as experience showed govern
ment officials that the Iaclllties OF the
bank could be used to advantage IN
the admins ton OF the public re-
ceipts and expenditures In many cases
thu bank was first made use OF by
finance ministers and paymasters, ana
the legal authority 1ouOWeQ laleE. IN
the Bank Of England, therefore, Is the
best possibIe example Of the develop
ment of an institution that has, little
by little, taken on new functions ana
new public responsibilities as eIpe5i-
euce showed these powers TO be eco
nOmiCally desirable.
Foundation OF Bank of England.
In 1884 William Paterson and ASSOC
ciates advanced the government E1,ZoO,-
900 IN return for $1,000 900 q year and
the privilege Of forming a corporation
under the title, the Governor and
Company OF the Bank OF England The
corporation was allowed to deal in bills
Of exchange, TO buy and sell gold and
silver bullion. TO lend money on secur-
ity with the right Of selling the Sc
curity three months after maturity OF
the debt secured The government debt
formed the capitaI-stOck and the bank
was allowed to issue notes up to that
amount. There IS nothing in the law |
establishing the bank that indicated
any intention OF turning the manage
ment Of the public debt over to IT, None
of the functions OF the eTchequer were
to be exercised by it However, the I
bank at once showed its importance In /
relation to the government credit by I
cashing the bills representing the pub Z
lie debt
In 1897 a new bank act allowed the |
Bank Of England to increase Its capital /
stock by taking subscriptions IN bank /
notes and government bills In llOd /
the capital stock was again increased I
the monopoly OF the bank was protected 1
by a provision prohibiting companies |
Of more than six persons from Issuing /
bills or notes which were payable with i
n six months Of the date OF issue. /
These two acts, together with the 4
original act of establishment. formed 4
The basis of the Bank Of England's po- 4
sitiOn until the beginning Of the 18th 4
century
Present Functions Of the Bank.
No change has been made during the
9th century in the methods Of Dor
owing or in the administration Of the
unded debt" Since 1853 the unfunded
ebt has been Of three forms treasury
bills. eEcheQuer bills and eNcheQuer
ponds. The treasury bills resemble
iOnlnterest bearing bills of exchange, :
llnning for less than a year and sub
ect to discount The eXcheQuer BILLS
ntitle the holder TO a stated sum at any
ears Of the date Of issue. The interest
ate is announced quarterly in the Lon
on Gazette. The eZcneQuer bonds are
OupOn bonds made OFT In round sums,
ayable to bearer, and mature within
Tx years from date Of issue. The bank
ecelVes rate Of payment for admin
tsering the public debt. which rate de-
ends On the amount Of the debt out
landing at certain dates
Public finance in England has ceased
o be isolated from private finance
through q gradual historical growth.
,he government has necessarily be-
ONE an important factor in the money
larket because Of its responsibility for
he management of the bank as we'll as !
ecause Of Its own finincial needs