,
fills a less important place than it otherwise would in the history of
legislation on currency. The bill was founded, however, on the report of
a secret committee which embraced Peel as well as Althorp and several
other members of high financial repute or great experience in the city.
Since the subject of it was familiar to a large section of members
engaged in business, and touched the pockets of bankers all over the
country, it was discussed in the house of commons far more earnestly
than the bill renewing the charter of the East India Company. In the end
two provisions were dropped, which directly encouraged the increase of
joint stock banks. The rest were passed, and contained important
modifications of the banking system as it then existed. The main
privileges of the Bank of England were continued, in spite of a strong
opposition and of protests against the one-sided inquiry said to have
been conducted by the secret committee. These privileges embraced the
exclusive possession of the government balances, the monopoly of limited
liability, then refused to other banks, and the right, shared by no
other joint stock bank, of issuing its own notes. Though private London
banks might have legally exercised this power they did not actually do
so, and nearly all of them deposited their reserves with the Bank of
England.

Another part of the scheme, which even Peel condemned, was thus briefly
stated in a preliminary resolution: "That, provided the Bank of England
continued liable, as at present, to defray in the current coin of the
realm all its existing engagements, it was expedient that its promissory
notes should be constituted a legal tender for sums of L5 and upwards".
In other words, country bankers would no longer be compelled to cash
their own notes, or pay off their deposits in gold, but might use Bank
of England notes instead, above the value of L5. The Bank of England,
however, and all its branches, remained liable to cash payments, as
before, so that, as Baring argued, only one intermediate stage was
interposed between the presentation of a country note and the exchange
of it for specie. Peel's objection, which did not prevail, chiefly
rested on the danger of the Bank of England closing its branches in its
own interests, in order to check the demand for cash. Though his fears
were not literally realised, experience disclosed the danger of country
banks multiplying unduly, and, by their over-issue of notes, caus