Bank of England Established – 2

The people neglected their calling. The legitimate desire of money grew into a fierce and fatal spirit of avarice.

Continuing The Bank of England Established,
our selection from John Francis. The selection is presented in four easy 5 minute installments.

Previously in The Bank of England Established.

Time: 1694
Place: London

The people neglected their calling. The legitimate desire of money grew into a fierce and fatal spirit of avarice. The arts so common at a later day were had recourse to. Project begat project, copper was to be turned into brass. Fortunes were to be realized by lotteries. The sea was to yield the treasures it had engulfed. Pearl-fisheries were to pay impossible percentages. “Lottery on lottery,” says a writer of the day, “engine on engine, multiplied wonderfully. If any person got considerably by a happy and useful invention, others followed in spite of the patent, and published printed proposals, filling the daily newspapers therewith, thus going on to jostle one another, and abuse the credulity of the people.”

Amid the many delusive and impracticable schemes were two important projects which have conferred great benefits on the English people. The first of these was the New River Company, the conception of Sir Hugh Middleton; the second was the corporation of the Bank of England. Nature and the great nations of antiquity suggested the former; the force and pressure of the times demanded the latter. It is from such demands that our chief institutions arise. By precept we may be taught their propriety; by example we may see their advantages. But until the necessity is personally felt they are sure to be neglected; and men wonder at their want of prescience and upbraid their shortsightedness when, with a sudden and sometimes startling success, the proposal they have slighted arises through the energy of another.

William Paterson, one of those men whose capacity is measured by failure or success, was the originator of the new bank; and it is perhaps unfortunate for his fame that no biography exists of this remarkable person. As the projector of the present Bank of Scotland, as the very soul of the celebrated Darien Company, and as the founder of the Bank of England, he deserves notice. A speculator as well as an adventurous man, he proved his belief in the practicability of the Darien scheme by accompanying that unfortunate expedition; and the formation of the Bank of England was the object of his desires and the subject of his thoughts for a long time previous to its establishment.

From that political change which had been so justly termed the “great revolution,” to the establishment of the Bank of England, the new Government had been in constant difficulties; and the ministerial mode of procuring money was degrading to a great people. The duties in support of the war waged for liberty and Protestantism were required before they were levied. The city corporation was usually applied to for an advance; interest which varied probably according to the necessity of the borrower rather than to the real value of cash, was paid for the accommodation. The officers of the city went round in their turn to the separate wards, and borrowed in smaller amounts the money they had advanced to the state. Interest and premiums were thus often paid to the extent of 25 and even 30 per cent., in proportion to the exigency of the case, and the trader found his pocket filled at the expense of the public. Mr. Paterson gives a graphic description:

The erection of this famous bank not only relieved the ministerial managers from their frequent processions into the city, for borrowing of money on the best and nearest public securities, at 10 or 12 per cent. per annum, but likewise gave life and currency to double or treble the value of its capital in other branches of the public credit, and so, under God, became the principal means of the success of the campaign in 1695; as, particularly, in reducing the important fortress of Namur, the first material step toward the peace concluded in 1679.”

To remedy this evil the Bank of England was projected; and after much labor, William Paterson, aided by Mr. Michael Godfrey, procured from Government a consideration of the proposal. The King was abroad when the scheme was laid before the council, but the Queen occupied his place. Here considerable opposition occurred. Paterson found it more difficult to procure consent than he anticipated, and all those who feared an invasion of their interests united to stop its progress. The goldsmith foresaw the destruction of his monopoly, and he opposed it from self-interest. The Tory foresaw an easier mode of gaining money for the government he abhorred, with a firmer hold on the people for the monarch he despised, and his antagonism bore all the energy of political partisanship.

The usurer foresaw the destruction of his oppressive extortion, and he resisted it with the vigor of his craft. The rich man foresaw his profits diminished on government contracts, and he vehemently and virtuously opposed it on all public principles. Loud therefore were the outcries and great the exertions of all parties when the bill was first introduced to the House of Commons. But outcries are vain and exertions futile in opposition to a dominant and powerful party. A majority had been secured for the measure; and they who opposed its progress covered their defeat with vehement denunciations and vague prophecies. The prophets are in their graves, and their predictions only survive in the history of that establishment the downfall of which they proclaimed.

“The scheme of a national bank,” says Smollett, “had been recommended to the ministry for the credit and security of the Government and the increase of trade and circulation. William Paterson was author of that which was carried into execution. When it was properly digested in the cabinet, and a majority in Parliament secured, it was introduced into the House of Commons. The supporters said it would rescue the nation out of the hands of extortioners; lower interest; raise the value of land; revive public credit; extend circulation; improve commerce; facilitate the annual supplies; and connect the people more closely with Government. The project was violently opposed by a strong party, who affirmed that it would become a monopoly, and engross the whole of the kingdom; that it might be employed to the worst purposes of arbitrary power; that it would weaken commerce by tempting people to withdraw their money from trade; that brokers and jobbers would prey on their fellow-creatures; encourage fraud and gambling; and corrupt the morals of the nation.”

Continued.

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