DOI Page / Citation link:
https://doi.org/10.11588/diglit.22140#0149
HISTORY OF CHARTERED
TRADE COMPANIES.
133
without being itself asfected by the general distrust. They who
have made a study of monetary science, in its most concrete form,
have always attached the highest interest to the Rest, or accumu-
lated and undivided profits, of the Bank.
The abandonment of their issue of notes by the London
bankers, led to the note issue of the metropolis being con-
centrated at the Bank. The notes of the Bank were not of low
amount, for it was late in the century that they issued them for
^"5, while the £\ note, necessitated by the circumstances of the
time, did not appear till the suspension of cash payments after
1797. But the fact that the Bank became the sole source of
paper money in the metropolis, enabled them to enlarge their
issues, and thereon to increase their profits. These notes were
of course only issued against value, as for example trade bills
and securities. But they circulated as money, and for many
reasons were more safe and convenient than metallic money is.
They operated also in international trade as short dated bills of
exchange, and of course during their existence they were a profit-
bearing issue to the Bank. The average existence indeed of a
note of large amount is very brief, almost momentary, for the
Bank invariably cancels every note which is returned to it. Nor
is that of the smallest note, which it now puts into circulation,
as prolonged as we should think when we look at the date of
notes which are circulated in the country. But it is a sensible
and significant time, and during that period the Bank is making
profit on its issue, as it does not give them, except in exchange
for deposits and securities.
For exactly a century and a half, the Bank possessed the power
of discretionary issue, that is, the circulation of notes to those
who wished for them, of course in exchange for negotiable
securities, to any amount. It is not, of course, to be believed
that it did not put a practical check on its issues whenever such
a course was deemed expedient. But it had the power, when
the occasion arose, to help straitened credit, when the person
straitened had adequate security to osfer, and it did so, at most
important and dangerous crises. It was at a crisis, not com-
mercial, but political, that the first breach was made in its
reputation. I am referring to the suspension of cash payments.
TRADE COMPANIES.
133
without being itself asfected by the general distrust. They who
have made a study of monetary science, in its most concrete form,
have always attached the highest interest to the Rest, or accumu-
lated and undivided profits, of the Bank.
The abandonment of their issue of notes by the London
bankers, led to the note issue of the metropolis being con-
centrated at the Bank. The notes of the Bank were not of low
amount, for it was late in the century that they issued them for
^"5, while the £\ note, necessitated by the circumstances of the
time, did not appear till the suspension of cash payments after
1797. But the fact that the Bank became the sole source of
paper money in the metropolis, enabled them to enlarge their
issues, and thereon to increase their profits. These notes were
of course only issued against value, as for example trade bills
and securities. But they circulated as money, and for many
reasons were more safe and convenient than metallic money is.
They operated also in international trade as short dated bills of
exchange, and of course during their existence they were a profit-
bearing issue to the Bank. The average existence indeed of a
note of large amount is very brief, almost momentary, for the
Bank invariably cancels every note which is returned to it. Nor
is that of the smallest note, which it now puts into circulation,
as prolonged as we should think when we look at the date of
notes which are circulated in the country. But it is a sensible
and significant time, and during that period the Bank is making
profit on its issue, as it does not give them, except in exchange
for deposits and securities.
For exactly a century and a half, the Bank possessed the power
of discretionary issue, that is, the circulation of notes to those
who wished for them, of course in exchange for negotiable
securities, to any amount. It is not, of course, to be believed
that it did not put a practical check on its issues whenever such
a course was deemed expedient. But it had the power, when
the occasion arose, to help straitened credit, when the person
straitened had adequate security to osfer, and it did so, at most
important and dangerous crises. It was at a crisis, not com-
mercial, but political, that the first breach was made in its
reputation. I am referring to the suspension of cash payments.