What exactly were the "Securities" mentioned in the Bank Charter Act 1844?

by no_flags

The UK Bank Charter Act 1844 established that the Bank of England could issue up to £14 million worth of money not backed by bullion. This £14 million was to be backed by "Securities":

And be it enacted, That upon the Thirty-first day of August One thousand eight hundred and forty-four there shall be transferred, appropriated, and set apart by the said Governor and Company to the Issue Department of the Bank of England Securities to the "Value of Fourteen million Pounds, whereof the Debt due by the Public to the said Governor and Company shall be and be deemed a Part;

https://www.legislation.gov.uk/ukpga/Vict/7-8/32/enacted

My questions:

  1. Did these securities physically exist, and did they grant the holder any rights?
  2. Why does the act state that the securities are deemed a part of the debt owed by the public to the bank? Does this mean that the UK government effectively canceled £14 million of its debt to the Bank of England by paying it off with the new securities created out of thin air? Or does it mean the Securities were newly created debt owed to the Bank?
Spirit_jitser
  1. These notes seem to have been against British government debt. So the securities would be existing debt, not new debt. Presumably they would grant interest payments like any other debt if the notes were redeemed.
  2. It probably means that they can be exchanged for the debt, or that a holder of debt could exchange it for notes. I don't think it has anything to do with creating or modifying government debt.*

Source, page 73. It mentions other things like how the BoE's note issuance was taxed while local banks were not. So there is a lot more to this. Maybe go to r/AskEconomics or r/EconomicHistory too.

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*this is especially true since around the turn of the 19th century at least some debt was issued that would promise an income forever: https://fredblog.stlouisfed.org/2016/07/consols-the-never-ending-bonds/. These would be rather valuable as long as the pound did not depreciate too much.