Encyclopaedia Britannica > Volume 3, Athens-BOI

317
BANKING
tors, who shall be elected between the 25th of March and
the 25th day of April each year, from among the members
of the company duly qualified.
“ That no dividend shall at any time be made by the
said governor and company, save only out of the interest,
profit, or produce arising by or out of the said capital,
stock, or fund, or by such dealing as is allowed by Act of
Parliament.
“They must be natural-born subjects of England, or
naturalized subjects ; they shall have in their own name,
and for their own use, severally, viz., the governor at least
£4000, the deputy-governor £3000, and each director
£2000, of the capital stock of the said corporation.
“ That thirteen or more of the said governors and direc¬
tors (of which the governor or deputy-governor must be
always one) shall constitute a court of directors, for the
management of the affairs of the company, and for the
appointment of all agents and servants which may be
necessary, paying them such salaries as they may consider
reasonable.
“ Every elector must have, in his own name and for his
own use, £500 or more capital stock, and can only give
one vote. He must, if required by any member present,
take the oath of stock, or the declaration of stock in case
he may be one of the people called Quakers.
“ Four general courts shall be held in every year, in the
months of September, December, April, and July. A
general court may be summoned at any time, upon the
requisition of nine proprietors duly qualified as electors.
The majority of electors in general courts have the power
to make and constitute bye-laws and ordinances for the
government of the corporation, provided that such bye-laws
and ordinances be not repugnant to the laws of the king¬
dom, and be confirmed and approved according to the
statutes in such case made and provided.”
The corporation is prohibited from engaging in any sort
of commercial undertaking other than dealing in bills of
exchange, and in gold and silver. It is authorised to
advance money upon the security of goods or merchandise
pledged to it, and to sell by public auction such goods as
are not redeemed within a specified time.
It was also enacted, in the same year in which the bank
was established, by statute 6 William and Mary, c. 20, that
the bank “ shall not deal in any goods, wares, or merchan¬
dise (except bullion), or purchase any lands or revenues
belonging to the Crown, or advance or lend to their
majesties, their heirs or successors, any sum or sums of
money, by way of loan or anticipation on any part or parts,
branch or branches, fund or funds of the revenue, now
granted or belonging, or hereafter to be granted, to their
majesties, their heirs and successors, other than such fund
or funds, part or parts, branch or branches of the said
revenue only on which a credit of loan is or shall be granted
by Parliament.” And in 1697 it was enacted, that the
“ common capital or principal stock, and also the real fund,
of the governor and company, or any profit or produce to
be made thereof, or arising thereby, shall be exempted from
any rates, taxes, assessments, or impositions whatsoever
during the continuance of the bank ; that all the profit,
benefit, and advantage from time to time arising out of the
management of the said corporation, shall be applied to the
uses of all the members of the said association of the
governor and company of the Bank of England, rateably
and in proportion to each member’s part, share, and interest
in the common capital and principal stock of the said
governor and company hereby established.”
In 1696, during the great recoinage, the bank was
involved in great difficulties, and was even compelled to
suspend payment of its notes, which were at a heavy
discount. Owing, however, to the judicious conduct of the
directors, and the assistance of the Government, the bank
got over the crisis. But it was at the same time judged
expedient, in order to place it in a situation the better to
withstand any adverse circumstances that might afterwards
occur, to increase the capitalfrom£l,200,OOOto £2,201,171.
In 1708 the directors undertook to pay off and cancel one
mdlion and a half of exchequer bills they had circulating
two years befoi'e, at 4J per cent., with the interest upon
them, amounting in all to £1,775,028, which increased the
permanent debt due by the public to the bank, including
£400,000 then advanced in consideration of the renewal
of the charter, to £3,375,028, for which they were allowed
6 per cent. The bank capital was then also doubled, or
increased to £4,402,342. But the year 1708 is chiefly
memorable in the history of the bank, for the Act pre¬
viously alluded to, which declared, that during the con¬
tinuance of the corporation of the Bank of England, “ it
should not be lawful for any body politic, erected or to be
erected, other than the said governor and company of the
Bank of England, or of any other persons whatsoever,
united or to be united in covenants or partnership, exceed¬
ing the number of six persons, in that part of Great Britain
called England, to borrow, owe, or take up any sum or
sums of money on their bills or notes payable on demand,
or in any less time than six months from the borrowing
thereof.” This proviso is said to have been elicited by the
Mine Adventurers Company having commenced banking
business and begun to issue notes. It will be seen on
examination that the proviso did not prohibit the forma¬
tion of associations for general banking business; it simply
forbade the issue of notes by associations of more than six
partners; but the issue of notes was regarded as so essen¬
tial to the business of banking, that it came to be believed
that joint-stock banking associations were absolutely pro¬
hibited in England, and no such association was founded
until after the legislation of 1826 (see p. 322) expressly
permitting them to be established. The charter of the
Bank of England, when first granted, was to continue for
eleven years certain, or till a year’s notice after the 1st of
August 1705. The charter was further prolonged in 1697.
In 1708, the bank, having advanced £400,000 for the
public service, without interest, the exclusive privileges of
the corporation were prolonged till 1733. And in con¬
sequence of various advances made at different times, the
exclusive privileges of the bank were continued by suc¬
cessive renewals till the 1st of August 1855, with the
proviso that they might be cancelled on a year’s notice
to that effect being given after the said 1st of August
1855.
We subjoin an account of the successive renewals of the
charter, of the conditions under which these renewals were
made, and of the variations in the amount and interest
of the permanent debt due by Government to the bank,
exclusive of the dead weight.
Date of
Renewal,
1694
Conditions under which Renewals were
made and Permanent Debt contracted.
Charter granted under the Act 5 and
6 Will. III. c. 20, redeemable
upon the expiration of twelve
months’ notice after the 1st
August 1705, upon payment by
the public to the hank of the de¬
mand therein specified.
Under this Act the hank ad¬
vanced to the public £1,200,000
in consideration of their receiving
an annuity of £100,000 a year,
viz., 8 per cent. interest and £4000
for management
Permanent Debt.
S. d.
1,200,000 0 0
Carry forward | 1.200,000 0 0