City of London, who well represented the ideas then most current He was declaiming against banks of limited liability, and some one asked’Why, what do you say, then, to the Bank of England, where you keep your own account?’ ‘Oh!’ he replied, ‘that is an exceptional case.’  And no doubt it was an exception of the greatest value to the Bank of England, because it induced many quiet and careful merchants to be directors of the Bank, who certainly would not have joined any bank where all their fortunes were liable, and where the liability was not limited.

Thirdly.  The Bank of England had the privilege of being the sole joint stock company permitted to issue bank notes in England.  Private London bankers did indeed issue notes down to the middle of the last century, but no joint stock company could do so.  The explanatory clause of the Act of 1742 sounds most curiously to our modern ears.  ’And to prevent any doubt that may arise concerning the privilege or power given to the said governor and company’ that is, the Bank of England’ of exclusive banking; and also in regard to creating any other bank or banks by Parliament, or restraining other persons from banking during the continuance of the said privilege granted to the governor and company of the Bank of England, as before recited; it is hereby further enacted and declared by the authority aforesaid, that it is the true intent and meaning of the said Act that no other bank shall be created, established, or allowed by Parliament, and that it shall not be lawful for any body politic or corporate whatsoever created or to be created, or for any other persons whatsoever united or to be united in covenants or partnership exceeding 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 at any less time than six months from the borrowing thereof during the continuance of such said privilege to the said governor and company, who are hereby declared to be and remain a corporation with the privilege of exclusive banking, as before recited.’  To our modern ears these words seem to mean more than they did.  The term banking was then applied only to the issue of notes and the taking up of money on bills on demand.  Our present system of deposit banking, in which no bills or promissory notes are issued, was not then known on a great scale, and was not called banking.  But its effect was very important.  It in time gave the Bank of England the monopoly of the note issue of the Metropolis.  It had at that time no branches, and so it did not compete for the country circulation.  But in the Metropolis, where it did compete, it was completely victorious.  No company but the Bank of England could issue notes, and unincorporated individuals gradually gave way, and ceased to do so.  Up to 1844 London private bankers might have issued notes if they pleased, but almost a hundred years ago they were forced out of the field.  The Bank of England has so long had a practical monopoly of the circulation, that it is commonly believed always to have had a legal monopoly.