Table VI.-Annual average circulation of Bank of England Notes for the years 1844-76, also the proportion in each year to 1844.

Table VII.-Annual average of the total Note circulation of the United Kingdom for the years 1844-76, also the proportion in each year to 1844.

The total amount of fixed issues, that is, issues that need not be backed by coin or bullion, in the United Kingdom at present (January, 1877) is :

It is not proposed to go into the controversy which may be said to have raged ever since the passing of the Act of 1844, as to whether the measure has or has not been successful in the attainment of the avowed objects of its authors, or whether it has or has not assisted to produce panics instead of preventing them. The subject has been dealt with by so many authors of ability on both sides without apparently making any converts that it seems better in a practical treatise like the present to be very brief. As already remarked the convertibility of the Bank of England note is practically secured, as it is hardly possible to conceive a chain of circumstances leading to the presentation of any part of the £15,000,000 issued against government securities, and even should such a contingency arise the bank would certainly have had sufficient notice to prepare for such an event. But could not the Bank, under the present enlightened management, have been trusted to look after itself, which in this case would have been equivalent to guarding the interest of the public ? Without the Act of 1844 there would have been the same means of increasing the revenue when occasion required as there are now; the raising of the rate of discount, and the sale or pledge of securities. And it may fairly be asked whether some of the provisions of the Act have not caused more pressure on the reserve than previously existed ? For instance, owing to the partial withdrawal of the country notes, a purely local demand, which would formerly have been met by local issues, now causes a drain on the central reserve, possibly at a very inconvenient time, And as to the prevention of panics, in these days the settlement of business transactions by means of notes or gold, as compared with cheques, is so small, and were the Act of 1844 repealed to-morrow would hardly be larger, that it is difficult to see what effect the restriction could have in that direction. The truth is, panics are the result of speculation and over-trading, and no regulation of the issue of bank notes will touch these causes. Speculation is carried on by means generally of advances through the medium of banks, and do not necessarily cause the issue of a single bank note. It is when the crisis comes, when cheques and bills of exchange are discredited, that the rush for bank notes ensues. And what happens then ? after a period of high rates of discount, panic, and failures, the Act is suspended, and gradually things work round to their normal condition. Clearly it cannot be all right with a law that on three several occasions has, to save a general bankruptcy, been obliged to be suspended, and which every one knows beforehand will be again, under similar circumstances.

When the Act of 1844 came into operation, the bank directors lowered the rate of discount, and from that time until November, 1845, the minimum rate did not rise above 2 1/2 per cent. At that date the bullion having fallen from £15,000,000, at which it stood in September, 1844, to about £13,500,000, the rate was raised to 3 1/2 per cent. In August, 1846, the bullion amounted to upwards of £16,000,000, and the rate was lowered to 3 per cent. The harvests had for some years been remarkably good, particularly that of 1844, but the following year the wheat crop was very deficient, and not only that, but the potato disease made its appearance, causing an almost total failure in Ireland.

At the same time the effects of the enormous speculations in railway securities were beginning to be severely felt. It was stated in a paper read before the Statistical Society in January, 1847, that the amount of capital for railways alone for which parliamentary sanction was asked in the session of 1846 was £340,000,000.

From August, 1846, the bullion began steadily to decrease, and notwithstanding that the Bank rate was raised in January, 1847, to 3 1/2, and then to 4 per cent., it still continued to diminish until, on the 10th of April, it had fallen to £9,800,000. Stringent measures were then taken, discount accommodation was greatly curtailed, and extreme rates charged. For a little while a better state of things ensued; it was, however, but short-lived. In the summer a number of very heavy failures principally in the corn trade, took place, other branches of business became involved, and finally, several bill brokers and bankers stopped payment.

On the 23rd October the bullion in the Bank had fallen to £8,300,000, and the reserve to less than £2,000,000/ On the 25th the Government letter to the bank was written, requesting them to continue their advances, and promising that if by so doing any violation of the Act of 1844 should be committed that an application should be made to Parliament for an Act of indemity. Instantly an improvement was apparent, the fact that notes could be had if wanted stopped the worst of the panic, and no actual infringement did take place.

The panic of 1847 cleared away a vast number of unsound business houses, and trade generally became much more sound and healthy; this lasted until the year 1855, when there was a considerable pressure owing to speculation more or less engendered during the Crimean war, which, however, passed off for the moment.

The second occasion of the suspension of the Bank Act was in 1857, when another monetary crisis took place. The causes, in the opinion of the Committee of the House of Commons appointed to inquire into the matter, leading to the panic of that year were three, viz.