Indeed, it cannot be wondered at that the Bank proprietors do not quite like their position.  Theirs is the oldest bank in the City, but their profits do not increase, while those of other banks most rapidly increase.  In 1844, the dividend on the stock of the Bank of England was 7 per cent, and the price of the stock itself 212; the dividend now is 9 per cent, and the price of the stock 232.  But in the same time the shares of the London and Westminster Bank, in spite of an addition of 100 per cent to the capital, have risen from 27 to 66, and the dividend from 6 per cent to 20 per cent.  That the Bank proprietors should not like to see other companies getting richer than their company is only natural.

Some part of the lowness of the Bank dividend, and of the consequent small value of Bank stock, is undoubtedly caused by the magnitude of the Bank capital; but much of it is also due to the great amount of unproductive cashof cash which yields no interestthat the Banking Department of the Bank of England keeps lying idle.  If we compare the London and Westminster Bankwhich is the first of the joint-stock banks in the public estimation and known to be very cautiously and carefully managedwith the Bank of England, we shall see the difference at once.  The London and Westminster has only 13 per cent of its liabilities lying idle.  The Banking Department of the Bank of England has over 40 per cent.  So great a difference in the management must cause, and does cause, a great difference in the profits.  Inevitably the shareholders of the Bank of England will dislike this great difference; more or less, they will always urge their directors to diminish (as far as possible) the unproductive reserve, and to augment as fall as possible their own dividend.

In most banks there would be a wholesome dread restraining the desire of the shareholders to reduce the reserve; they would fear to impair the credit of the bank.  But fortunately or unfortunately, no one has any fear about the Bank of England.  The English world at least believes that it will not, almost that it cannot, fail.  Three times since 1844 the Banking Department has received assistance, and would have failed without it.  In 1825, the entire concern almost suspended payment; in 1797, it actually did so.  But still there is a faith in the Bank, contrary to experience, and despising evidence.  No doubt in every one of these years the condition of the Bank, divided or undivided, was in a certain sense most sound; it could ultimately have paid all its creditors all it owed, and returned to its shareholders all their own capital.  But ultimate payment is not what the creditors of a bank want; they want present, not postponed, payment; they want to be repaid according to agreement; the contract was that they should be paid on demand, and if they are not paid on demand they may be ruined.  And that instant payment, in the years I speak of, the Bank of England certainly could not have made.