he process of education produces so
great a change in the human spirit that men will work as well for the
small salary of the Civil Service, with a K.C.B. thrown in, as they
will now in order to gain the prizes of industry and finance, then
perhaps, from the purely economic point of view, the Socialisation
of banking may be justified. But we are a long way yet from any such
achievement, and if it is the case that the rapid centralisation of
banking power in comparatively few hands carries with it the danger
of an attempt to nationalise a business which requires, above all,
extreme adaptability and sensitiveness to the needs of the moment
as they arise, this is certainly a danger which has to be carefully
considered by those who are responsible for the development of these
amalgamation processes.

And now another great stone has been thrown into the middle of the
banking pond, causing an ever-widening circle of ripples and provoking
the beginning of a discussion which is likely to be with us for some
time to come. Sir Edward Holden, at the meeting of the London City and
Midland Bank shareholders on January 29th, made an urgent demand for
the immediate repeal of the Bank Act of 1844. This Act was passed,
as all men know, in order to restrict the creation of credit in
the United Kingdom. In the early part of the last century the most
important part of a bank's business consisted of the issue of notes,
and banking had been carried on in a manner which the country
considered unsatisfactory because banks had not paid sufficient
attention to the proportion of cash that they ought to hold in their
tills to meet notes if they were presented. Parliament in its wisdom
consequently ordained that the amount of notes which the banks should
be allowed to issue, except against actual metal in their vaults,
should be fixed at the amount of their issue at that time. Above the
limit so laid down any notes issued by the banks were to be backed by
metal. In the case of the Bank of England the limit then established
was L14,000,000, and it was enacted that if any note-issuing bank gave
up its right to a note issue the Bank of England should be empowered
to increase its power to issue notes against securities to the extent
of two-thirds of the power enjoyed by the bank which was giving up its
privilege. By this process the Bank of England's right to issue notes
against securities, what is usually called its fiduciary issue, has
risen to L18,