Snippets 60. Until the Bank Charter Act of 1844, the Bank of England was just one of many institutions that were issuing bank notes. As amazing as it might seem nowadays, any banking institution could offer their own bank notes, and even after the act banks that were already issuing notes were allowed to continue, with the last private bank issuing notes as late as 1921.
In 1810, Peter Richard Hoare expressed his concern with the amount of different bank notes, and the quantities being supplied without necessarily being backed up with gold deposits. His book, A Letter, Containing Observations on some of the Effects of our Paper Currency, is an eye-opener as to the complex situation that had developed at the time.
Without doubt there are amongst the class of bankers, to which I have alluded, men of the highest spirit, and of most exemplary liberality, who, although, the profits of the business in which they are engaged, depend almost entirely upon the circulation of their promissory notes (for they deem it no crime to make a profit of that confidence which they know to be well merited; nay, perhaps most conscientiously believe, is, at the same time, employed serviceably for the public, whilst they themselves make a profit of it) would scorn to compromise the character of their house, by meanly endeavouring to evade the due discharge of their engagements. But the class does not consist of men of this stamp only.
Nay, the practice of issuing promissory notes to answer the purpose of ready money, is not confined to bankers properly so called; I mean those who have left the safe custody of other persons’ money, according to the new method; it extents, also, to attornies, manufacturers, and tradesmen, to the proprietors of waggons and stage coaches, to linen drapers and tea dealers. These, also, inundate the country with their paper currency. Not a town, scarce a village, that is not furnished with counting house or desk, whence the flood issue forth; and, as if it were decreed to overwhelm and wash away as much as possible the original coin of the kingdom, pasteboard tokens are forced into the circulating medium, as a substitute for the crown piece, and the workman, who receives any payment at all, is oftentimes under the necessity of receiving it in that form.
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