The government also induced the bank to make advances upon the security of goods, and accordingly the bank established boards for this purpose at the following places, and advanced to the undermentioned amounts: -
To carry these measures into effect several Acts of Parliament were passed, viz.: -
"An Act to facilitate the advancing of money by the Governors and Company of the Bank of England, upon deposits and pledges" (7 Geo. IV. c. 7). It was enacted that persons in possession of bills of lading, warrants, etc, should be deemed owners of the goods therein mentioned, so far as to make valid any contracts for the advance of money thereupon by the Bank of England.
"An Act to limit, and after a certain period to prohibit, the issuing of promissory notes, under a limited sum, in England" (7 Geo. IV. c. 6). By this Act, no further notes under £5 were allowed to be stamped, and those already stamped could not be issued or re-issued after the 5th of April, 1829, under a penalty of £20. The Bank of England was required to make monthly returns to the Treasury of the weekly amounts of their notes in circulation under £5, to be published in the Gazette, and laid before parliament. And after the 5th of April, 1829, all bankers' notes under £20 were to be made payable at the place of issue, though they might also be made payable at other places.
"An Act for the better regulating co-partnerships of certain bankers in England," etc. (7 Geo. IV. c. 46). According to this Act -
1. Banks having more than six partners might carry on business in England at a greater distance than sixty-five miles from London, provided they have no establishment as bankers in London, and that all the partners are liable for the whole debts of the bank.
2. The banks shall not issue their notes at a place within sixty-five miles from London, nor draw any bills on London for a less amount than £50.
3. The banks may sue, and be sued, in the name of their public officers; and when judgment is obtained against such public officers, execution may be issued against any member of the co-partnership.
4. Previous to issuing notes, the bank shall deliver to the Stamp Office, schedules containing the name or title of the bank - the names and places of abode of all the partners - the names of the places where the banks are established - and the names and descriptions of the public officers in whose name the bank wishes to sue and be sued.
5. These banks are allowed to compound for the stamp duties on their notes, at the rate of seven shillings per annum for every in circulation.
By the fifteenth clause of this Act, the Bank of England was expressly authorized to establish branches. This was enacted to "prevent any doubts that might arise" upon the subject. The bank accordingly opened branches this year at Gloucester, Manchester, and Swansea.
The extension of the branches of the Bank of England this year occasioned great dissatisfaction among the country bankers. The establishment of rival banks in their own neighbourhood, was a circumstance that the country bankers could not view with indifference. They declared that the Bank of England, and not themselves, had been the cause of the previous spirit of speculation; that the Bank of England, by their advances to government and loans on mortgage, had made excessive issues, and that now to extend their influence, at the expense of the country bankers, was to reward the guilty and to punish the innocent. The country bankers had been accustomed to charge five per cent. on the bills they discounted, and at some places five or six shillings commission besides the discount, but the branches of the Bank of England charged only four per cent., without any commission. The country bankers were of course compelled to do business on the same terms, or to permit their customers to go to the branch. The chief advantage the country bankers possessed over the branch hanks was, that they continued to allow interest on deposits, which the branch banks did not. But the additional confidence which was then possessed by the branch banks may, notwithstanding, have induced some depositors to give them a preference to the country bankers.
On December 7, the country bankers held a meeting at the London Tavern, Bishopsgate Street, where they passed several resolutions, and appointed a deputation to wait upon Lord Goderich, the first Lord of the Treasury, and Mr. Herries, the Chancellor the Exchequer. Among other resolutions were the following: -
"That the late measures of the Bank of England in the establishment of branch banks have the evident tendency to subvert the general banking system that has long existed throughout the country, and which has grown up with, and been adapted to, the wants and conveniences of the public.
"That it can be distinctly proved that the prosperity of trade, the support of agriculture, the increase of general improvement, and the productiveness of the national revenue, are intimately connected with the existing system of banking.
"That the country bankers would not complain of rival establishments, founded upon equal terms; but they do complain of being required to compete with a great company, possessing a monopoly and exclusive privileges.
"That should this great corporation, conducted by directors who are not personally responsible, succeed, by means of these exclusive advantages, in their apparent object of supplanting the existing banking establishments, they will thereby be rendered masters of the circulation of the country, which they will be enabled to contract or expand according to their own will, and thus be armed with a tremendous power and influence, dangerous to the stability of property and the independence of the country."