9th. That it should be lawful for the Bank to compound with banks of issue to discontinue their own notes and substitute those of the Bank, for a payment of 1 per cent. per annum, up to the 1st August, 1856, the amount of such composition to be deducted from the sum paid by the Bank to the public.

The authorized circulation has in accordance with the provision of the 5th clause been thrice increased, viz.; in December, 1855, £475,000, July, 1861, £175,000, and January, 1866, £350,000, which brings the fixed issue of the Bank to £15,000,000, exclusive of that against coin and bullion.

The following are the principal clauses in the Act of 1844 affecting the issue of notes by country bankers.

1st. That no person other than a banker who was lawfully issuing his own notes on the 6th May, 1844, should after the passing of the Act be allowed to do so in any parts of the United Kingdom.

2nd. That after the passing of the Act it should not be lawful for any banker to draw, accept, make, or issue in England or Wales, any bill of exchange, promissory note, or engagement for the payment of money to bearer on demand, or to borrow, owe, or take up any sums of money on the bills or notes of such banker payable to bearer on demand, except such bankers as were on the 6th May, 1844, issuing their own notes, who should, under restrictions hereafter named, continue to do so. The rights of any existing firm should not be affected by the admission or retirement of partners, provided the number did not exceed six.

3rd. That if a bank of issue should, through bankruptcy or any other cause, discontinue to issue notes, it should not be lawful to resume.

4th. Every banker claiming to issue notes was required to certify to the Commissioners of Stamps and Taxes, the place, name, and firm at and under which he had issued notes during the twelve weeks preceding the 27th April, 1844. The average amount in circulation for those twelve weeks having been ascertained, it should then be lawful for such bank to continue to issue notes, provided that on an average the certified sum should not be exceeded.

5th. That if during the twelve weeks preceding the 27th April, 1844, two banks of issue had amalgamated, it should be lawful for the united bank to issue notes to the aggregate amount of each separate bank.

6th. That the Commissioners of Stamps and Taxes should publish in the 'London Gazette' a statement of the authorized issue of each bank.

7th. That if, after the passing of the Act, two banks of issue should amalgamate, the aggregate amount of the notes of each separate bank should be the authorized issue of the united banks, provided the total number of partners did not exceed six, in which case the privilege of issue would cease.

8th. That if on an average of four weeks it should appear that any banker had exceeded his authorized issue, he should forfeit a sum equal to the excess.

9th. That every bank of issue should make a weekly return to the Commissioners of Stamps and Taxes of the amount of notes in circulation each day of the week, and every fourth week an additional return showing the average circulation during that time, such returns to be published in the 'London Gazette.' A false return to be punished by a fine of £100.

10th. That the average should not exceed the amount certified by the Commissioners as the authorized issue.

11th. That the Commissioners should have the power to examine and make extracts from the books of any bank of issue.

12th. That on the 1st January in each year a return should be made to the aforesaid Commissioners of the names, residence, and occupation of each member of a private banking firm, and of each shareholder in a joint-stock bank, such information to be published in the 'London Gazette' and the local newspapers.

13th. That banks of issue having branches should be required to take out a licence for each branch, but banks in existence at the passing of the Act, and having already four licences, should not be required to increase that number.

14th. That after the passing of the Act it should be lawful for any number of persons, although exceeding six, carrying on business in London, or within sixty-five miles thereof, to draw, accept, or indorse bills of exchange, not being payable to bearer on demand, any Acts to the contrary notwithstanding.

In the twenty-seventh clause it is stated that the Bank shall enjoy the exclusive privileges granted by this Act, etc. etc, subject, nevertheless, to redemption upon the terms and conditions following :-"At any time upon twelve months' notice, to be given after the 1st day of August, 1855, and upon repayment by Parliament of £11,015,100, being the debt due from the public to the Governor and Company."

On reading over the clauses of this Act and the speeches of Sir Robert Peel in its support, it would appear that in the opinion of the Prime Minister the currency of the country, that is, bank notes, gold and silver, should be a fixed quantity under all conditions of trade and commerce, so far as legislation could bring it about. He would, therefore, have preferred the establishment of a central bank of issue, under the direct management of the Government, the functions of which would have been automatic, as indeed those of the issue department of the Bank of England now are, in which case the whole of the profits of issue would have belonged to the public. To do this it would of course have been necessary to sweep away the country note issues at once, and it is tolerably certain that the attempt to do so would have been made but for the fear that the hostility of the country bankers might endanger the success of the measure. For this reason the process of extinction was made gradual, though had Sir Robert Peel foreseen that at the end of more than thirty years after the passing of his act there would still remain in England and Wales no less than 167 banks of issue with an authorized circulation of £6,500,000, it is more than probable that the clauses would have been framed for more speedy effect. In speaking of the great evils of uncontrolled competition amongst banks of issue, Sir Robert Peel adduced the failures of the American banks, but singularly enough he omitted all mention of the Scotch banks, which were even less controlled, and of whose solvency there had never been any doubt.