changes. Third, whether the demands on the Bank came
from at home or abroad, it was to maintain a metallic reserve
equal to one-third of its liabilities. This supposed rule it was
difficult invariably to observe. In fact it was often broken.

A heavy drain of specie in 1839 carried down the reserve
to a nominal amount. The condition of the Bank became
so serious that it was only saved from failure by the use of
heroic measures the most important of which was a large
loan from the Bank of France which had been founded in 1800
by Napoleon.

It was evident to the thoughtful banking men of the day,
and to other students of finance, that steps must be taken to
safeguard the Bank's reserves in future. It was desirable also,
if possible, to stop these recurring periods of distress in the
business world. Following a customary English method for
dealing with difficult problems, a parliamentary committee
was appointed to examine into the causes of the trouble and to
suggest a remedy. This committee sat for over five years and
asked more than 14,000 questions without reaching any defi-
nite conclusion or even presenting a report. Finally Sir
Robert Peel, then Prime Minister, decided that it was time
to bring matters to a head. Therefore, taking advantage of
a clause in the law which empowered the Government to sus-
pend the Bank's charter in 1845, he brought forward a bill
which became the Bank Charter Act of 1844.

Convinced that the source of the trouble was due to over-
issues of currency, he sought to devise a plan which would
cure this evil. He proposed to take away from the private
and joint-stock banks the right of issue and to concentrate
all such rights in the Bank of England. Further to guard
against over-issues he proposed that, save for a minimum

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