"A bill will also be introduced into Parliament, with the view of regulating country banks. The provisions of this measure will be such as to hold out an inducement to the establishment of joint-stock banks who will not issue their own notes.
"His Majesty's government desire me to call your attention to the advantages which these different propositions are likely to confer upon the bank. Their tendency must be to extend the circulation of its notes, and by relieving bills at short dates from the usury laws to facilitate its operations. While, on the other hand, the only relaxation in its exclusive privileges, as they at present exist, which is required is, the permission given to joint-stock banks, established at a greater distance than sixty-five miles from the metropolis, to draw bills and to issue notes payable in London. His Majesty's government, therefore, think that they have a right to expect some considerable pecuniary advantages from the bank in the management of the government business. They consequently propose that government should repay to the bank twenty-five per cent. of the debts of £14,500,000 now due, and that the bank should deduct from the payments made to them from the government for the transaction of the government business the annual sum of £120,000.
1 The Usury Acts were repealed in 1854.
"I hope that this proposal will be satisfactory to the bank directors, and that by making this arrangement an end may be speedily put to the suspense now existing. "I have the honour to be, "Gentlemen, "Tour most obedient humble servant,
"Althorp. "To the Governor and Deputy-Governor of the Bank of England."
After some discussion, the further consideration of this letter was adjourned to a future meeting.
On the same evening Lord Althorp brought forward the subject in the House of Commons. Besides the measures that were connected with the Bank of England, he announced the measures for regulating country banks. These were -
1. That government should have the power of granting charters to joint-stock banks issuing notes beyond sixty-five miles from London, and to joint-stock banks within the sixty-five miles, provided they issued only the notes of the Bank of England.
2. That the joint-stock banks which issued notes should be required to pay up one-half of their capital, and all the shareholders be answerable individually to the full extent of their property.
3. That the joint-stock banks which did not issue their own notes should be required to pay up only one-fourth of their capital, and the shareholders be responsible only to the amounts of their shares.
4. That the government when granting the charter should have the power to decide whether the amount of capital subscribed was a sufficient amount for the place in which the bank was situated.
5. That each private bank should be required to send a statement of its accounts to the government in London, as a strictly confidential paper, which was not to be published in a separate form, but, the accounts being added together, the total results should be given to the public periodically.
6. That to enable the government to know the total amount of notes in circulation, each private bank, as well as each joint-stock bank, should be compelled to compound for the stamp duties.
The Bank of England proprietors agreed, at a subsequent meeting, to the measures which had a reference to them. But the country bankers expressed great dissatisfaction; and on the 12th of June they presented a memorial to Earl Grey, the first Lord of the Treasury, and to Lord Althorp, the Chancellor of the Exchequer, upon the subject. In consequence of the opposition of the country bankers, Lord Althorp postponed his measures for the regulation of the private and joint-stock banks, and carried forward his plan for the renewal of the charter of the Bank of England. The following bill was ultimately passed into a law: -
An Act (3 and 4 Will. IV. c. 98) for giving to the corporation of the Governor and Company of the Bank of England certain privileges, for a limited period, under certain conditions, was passed August 29, 1833.
"Whereas an Act was passed in the 39th and 40th years of the reign of his Majesty King George III., intituled, An Act for establishing an agreement with the Governor and Company of the Bank of England, for advancing the sum of £3,000,000. towards the supply for the service of the year 1800: and whereas it was by the said recited Act declared and enacted, that the said governor and company should be and continue a corporation, with such powers, authorities, emoluments, profits, and advantages, and such privileges of exclusive banking, as are in the said recited Act specified, subject nevertheless to the powers and conditions of redemption, and on the terms in the said Act mentioned: and whereas an Act passed in the 7th year of the reign of his late Majesty King George IV., intituled, An Act for the better regulating co-partnerships of certain bankers in England, and for amending so much of an Act of the 39th and 40th years of the reign of his late Majesty King George III., intituled, An Act for establishing an agreement with the Governor and Company of the Bank of England for advancing the sum of £3,000,000 towards the supply for the service of the year 1800, as relates to the same: and whereas it is expedient that certain privileges of exclusive banking should be continued to the said governor and company for a further limited period, upon certain conditions: and whereas the said Governor and Company of the Bank of England are willing to deduct and allow to the public, from the sums now payable to the said governor and company for the charges of management of the public unredeemed debt, the annual sum hereinafter mentioned, and for the period in this Act specified, provided the privilege of exclusive banking specified in this Act is continued to the said governor and company for the period specified in this Act."