The Bank Charter Act of 1844. - William Stanley Jevons, Money and the Mechanism of Exchange [1875]
Edition used:
Money and the Mechanism of Exchange (New York: D. Appleton and Co. 1876).
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The Bank Charter Act of 1844.
At all times, during the last two hundred years, there has been some currency topic upon the anvil. In early days it was the scarcity of silver coin, the South Sea Bubble, or the price of the guinea. Later on came the restriction of specie payments, the bullion report, the one-pound note question, and the joint stock banks. Since 1844, however, all currency theorists have concentrated their attentions upon the Bank Charter Act of that year, and, while endlessly differing about the nature of the remedy, have been unanimous in attributing all kinds of evils to a settlement of our currency, which I believe to be a monument of sound and skilful financial legislation.
The Acts of 1844 and 1845 placed a fixed limit upon the amount of notes which can in this country be issued without an equal deposit of gold. At present (April, 1875) the Bank of England can issue, without gold, fifteen millions; the private and joint stock banks of England are individually restricted to fixed amounts, which, added together, make about £6,460,000, while the Scotch banks can, in a similar manner, issue notes to the amount of £2,750,000, and the Irish banks to the amount of £6,350,000, making in all about 30½ millions. In addition to this the Bank of England, and the Scotch and Irish banks, can issue as many more notes as they have deposits of bullion or coin; and in the year 1874, the extra amount thus issued was about 14½ millions. Let it be never forgotten, that no restriction is thus placed upon the sum total of the currency of the country; for the original legal tender of the country is the coined sovereign of 123.274 grains of gold, and every one who has the gold can readily turn it into sovereigns. The objectors to the Bank Charter Act urge that we want more currency, but they cannot really mean more metallic currency. We must not look to changes in the law to increase the amount of specie in the country, and, as I have remarked, any one can get sovereigns if he has the needful gold. This metal, again, is only to be had, in the absence of gold mines, by that state of foreign trade which brings it, and does not drain it away again. The principal currency, in short, must be regarded as a commodity, the supply of which is to be left to the natural action of the laws of supply and demand. The unrestricted issue of paper representative notes produces an artificial interference with these natural conditions.
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