The following question was put to the governor by a member of the Committee of the House of Commons: - "You have described as part of the operation of the Act of 1844, that you were during the year 1847 obliged to lend consols instead of notes, on account of the limit prescribed by the Act, - that you borrowed on consols in April, - that you were obliged to raise the rate of interest to 9 per cent., - that you refused loans on exchequer bills, - that there was a pressure in April, and a panic in October, - and that Government were obliged to interpose by a letter, in order to protect the public from the restrictive effects of the Act - Do you call that a satisfactory history of any system? "1
We must, however, distinguish between "the system" as established by the Act of Parliament, and the administration of the banking department in consequence of the establishment of that system. We have given in the preceding section our opinion of the system. But the administration of the Banking Department of the Bank of England under the system, has, in our sober judgment, been distinguished by a high degree of both wisdom and liberality.
The administration of the banking department since September, 1848, does not call for any particular remark. We had the usual indications of the first stage after a panic. The bullion in the issue department increased from £12,883,505 to £14,330,845; the notes in reserve from £8,784,795 to £9,553,460. Money had been abundant, and the rate of interest low. On the 2nd of November, 1848, the bank reduced the minimum rate of discount to 3 per cent. This would probably have been done at an earlier period but for the political aspect of the Continent. The same reason possibly induced the Directors to maintain the same interest to February, 1849, although this appears to be an abandonment of the principle adopted in the year 1844.
1 Commons, 3450.