- Bank Charter Act 1844
The Bank Charter Act 1844 (7 & 8 Vict. c. 32) was an Act of the
Parliament of the United Kingdom , passed under the government ofRobert Peel , which restricted the powers of British banks and gave exclusive note-issuing powers to the centralBank of England . This marked the beginning of the classicgold standard of the 19th century.Under the Act, no bank other than the Bank of England could issue new
banknote s, and issuing banks would have to withdraw their existing notes in the event of their being the subject of a takeover. At the same time, the Bank of England was restricted to issue new banknotes only if they were 100% backed by gold. The Act served to restrict the supply of new notes reaching circulation, and gave the Bank of England an effective monopoly on the printing of new notes.The Act was a victory for the British
currency school , who argued that the issue of new banknotes was a major cause ofprice inflation .Although the Act required new notes to be backed fully by gold, the government retained the power to suspend the Act in case of financial crisis, and this in fact happened several times, in the years
1847 ,1857 , and in1866 , during theOverend Gurney crisis .Also, while the act restricted the supply of new notes, it did not restrict the creation of new bank deposits, and these would continue to increase in size over the course of the
19th century .ee also
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Henry Meulen - a critic who saw the Bank Charter Act as a cause of economic depression and political revolution
*Banknotes of the pound sterling - a list of note-issuing banks in theSterling area External links
*UK-SLD|1034778
* [http://www.ledr.com/bank_act/1844032.htm Bank Charter Act 1844] - full text
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