The conservative response to change 1832-46: The 1844 Bank Charter Act Flashcards
What was Peel’s objective in passing the act according to Mathias?
To inspire just confidence in the medium of exchange and to ensure that the issuing of bank notes was in relation to the volume of gold reserves held by the BoE, in other words to curb the over issue of bank notes, which were the cause of continuing financial instability
What was the context behind the reform?
It was passed against the background of years of discussion and arguement among politicians, financiers and experts into how to make the financial system more stable, secure and dependable
How did the act increase the power of the BoE?
It confirmed that it was able to issue notes with a face value instead of cash, but any notes issued over £14 million had to be supported by gold bullion reserves. The rights of other banks to issue notes was strictly limited in an attempt to give it monopoly of issue
Why was the act not comprehensive?
Because several banks in Scotland, like the BoS and the Royal BoS retained the right to note issuance
What two operations did the act divide the BoE into?
The issuance of notes and dealing with day to day banking issues
How often were accounts made public?
Weekly
Why did industrialisation necessitate the act?
Expanding industry meant that larger businesses required larger loans that small banks could not provide
How did the act change currency?
Gradually BoE notes became the normal currency - aside from Scottish bank notes
What did businesses do during this period of readjustment?
A cheque system developed, enabling business to be carried out without the exchange of notes or cash
What is the act often considered to be?
One of the most important pieces of Peelite legislation
When did the act remain in place until?
WWI
What made the act so significant in the long term?
It marked the beginning of the BoE’s role as administrator of the government’s monetary policy and injected greater confidence into the economy
Why was it so important to Peel that this act was successful?
Because it was crucial to the rest of his economic policy
Why was the act so important for the British economy as a whole?
Because the powerful economic interests in Britain depended upon a sound currency and strong international trade. If stakeholders new currency was backed up by gold, they would be confident that the banks issued would be worth their face value as they were supported by a valuable commodity. Investors could be sure that the new system would deter reckless speculators, thereby boosting the economy
