DOI Seite / Zitierlink:
https://doi.org/10.11588/diglit.22140#0103
THE DEVELOPMENT OF CREDIT AGENCIES. 87
ness of the Bank of England, and was ready not only to take its
notes, but to exchange the gold which it had drawn out, through
the bankers in which it had distrusted, for the notes of the Bank.
Thus, when a London bank failed on December 8th, there at once
arose a run on the other London banks on the two following days.
But these banks were prepared, and the alarm subsided. On the
12th, however, another London bank failed, and the run re-com-
menced. On this occasion the Bank of England began a practice
which before it had steadily refused to adopt—that of lending
money on its own or on Government stocks. But during the
intensity of the crisis, the Bank made free loans of its own
notes, and humoured the panic so effectually that it reduced its
own stock of coin and bullion to little over a million, to as low
an amount as the cover stood in the memorable 1797. But the
Bank knew that the gold coin was in the country, and that, the
trouble over, it would rapidly return. For, though credit was
suspended, and it was impossible without serious loss to turn
securities into cash, the property and the securities were there,
and the Bank was able to fortify the credit of others by an
enormous advance of its own notes on security. It is note-
worthy that during this period the Bank raised its rate of interest
only once from 4 to 5 per cent., and, indeed, for the first century
and a quarter of its career its rate of discount was generally
invariable.
Three years before the trouble of 1847, Sir Robert Peel, then
at the height of his reputation—well-deserved, indeed—and
leading a large and united party, passed the Act under which the
Bank of England is still regulated. I cannot enter here on the
criticism of that Act. It is perhaps the strongest meat in all
economics, and requires the most energetic digestion. I do not
as yet venture on discussing the provisions of a statute on which
more has been written adversely and eulogistically than on any
other Act of legislation. It is susficient to say that while its advo-
cates declare it to be the quintessence of monetary wisdom, the
most acute and dispassionate of its critics says that it is the " most
wanton, ill-advised, pedantic, and rash piece of legislation which
ever came within his observation." The Act has been frequently
suspended, and under circumstances where it was meant to be
ness of the Bank of England, and was ready not only to take its
notes, but to exchange the gold which it had drawn out, through
the bankers in which it had distrusted, for the notes of the Bank.
Thus, when a London bank failed on December 8th, there at once
arose a run on the other London banks on the two following days.
But these banks were prepared, and the alarm subsided. On the
12th, however, another London bank failed, and the run re-com-
menced. On this occasion the Bank of England began a practice
which before it had steadily refused to adopt—that of lending
money on its own or on Government stocks. But during the
intensity of the crisis, the Bank made free loans of its own
notes, and humoured the panic so effectually that it reduced its
own stock of coin and bullion to little over a million, to as low
an amount as the cover stood in the memorable 1797. But the
Bank knew that the gold coin was in the country, and that, the
trouble over, it would rapidly return. For, though credit was
suspended, and it was impossible without serious loss to turn
securities into cash, the property and the securities were there,
and the Bank was able to fortify the credit of others by an
enormous advance of its own notes on security. It is note-
worthy that during this period the Bank raised its rate of interest
only once from 4 to 5 per cent., and, indeed, for the first century
and a quarter of its career its rate of discount was generally
invariable.
Three years before the trouble of 1847, Sir Robert Peel, then
at the height of his reputation—well-deserved, indeed—and
leading a large and united party, passed the Act under which the
Bank of England is still regulated. I cannot enter here on the
criticism of that Act. It is perhaps the strongest meat in all
economics, and requires the most energetic digestion. I do not
as yet venture on discussing the provisions of a statute on which
more has been written adversely and eulogistically than on any
other Act of legislation. It is susficient to say that while its advo-
cates declare it to be the quintessence of monetary wisdom, the
most acute and dispassionate of its critics says that it is the " most
wanton, ill-advised, pedantic, and rash piece of legislation which
ever came within his observation." The Act has been frequently
suspended, and under circumstances where it was meant to be