Bank of England Established – 3

Previous governments had raised money with comparative ease because they were legitimate. That of William was felt to be precarious.

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

Previous governments had raised money with comparative ease because they were legitimate. That of William was felt to be precarious. It was feared by the money-lender that a similar convulsion to the one which had borne him so easily to the throne of a great nation might waft him back to the shores of that Holland he so dearly loved. Thus the very circumstances which made supplies necessary also made them scarce.

In addition to these things his person was unpopular. His phlegmatic Dutch habits contrasted unfavorably with those of the graceful Stuarts, whose evil qualities were forgotten in the remembrance of their showy characteristics. Neither his Dutch followers nor his Dutch manners were regarded with favor; and had it not been for his eminently kingly capacity, these things would have proved as dangerous to the throne as they tended to make the sovereign unpopular. In a pamphlet published a few years after the establishment of the new corporation is the following vivid picture of this monarch’s government:

In spite of the most glorious Prince and most vigilant General the world has ever seen, yet the enemy gained upon us every year; the funds were run down, the credit jobbed away in Change Alley, the King and his troops devoured by mechanics, and sold to usury, tallies lay bundled up like Bath fagots in the hands of brokers and stock-jobbers; the Parliament gave taxes, levied funds, but the loans were at the mercy of those men (the jobbers); and they showed their mercy, indeed, by devouring the King and the army, the Parliament, and indeed the whole nation; bringing their great Prince sometimes to that exigence through inexpressible extortions that were put upon him, that he has even gone into the fields without his equipage, nay even without his army; the regiments have been unclothed when the King had been in the field, and the willing, brave English spirits, eager to honor their country, and follow such a King, have marched even to battle without either stockings or shoes, while his servants have been every day working in Exchange Alley to get his men money of the stock-jobbers, even after all the horrible demands of discount have been allowed; and at last, scarce 50 per cent. of the money granted by Parliament has come into the hands of the Exchequer, and that late, too late for service, and by driblets, till the King has been tired with the delay.”

This is a strange picture; beating even Mr. Paterson’s account of the “processions in the city,” and adds another convincing proof of the necessity which then existed for some establishment, capable of advancing money at a reasonable rate, on the security of Parliamentary grants.

The scheme proposed by William Paterson was too important not to meet with many enemies, and it appears from a pamphlet by Mr. Godfrey, the first deputy-governor, that “some pretended to dislike the bank only for fear it should disappoint their majesties of the supplies proposed to be raised.” That “all the several companies of oppressors are strangely alarmed, and exclaim at the bank, and seemed to have joined in a confederacy against it.” That “extortion, usury, and oppression were never so attacked as they are likely to be by the bank.” That “others pretend the bank will join with the prince to make him absolute. That the concern have too good a bargain and that it would be prejudicial to trade.” In Bishop Burners History of His Own Times we read an additional evidence of its necessity:

It was visible that all the enemies of the Government set themselves against it with such a vehemence of zeal that this alone convinced all people that they saw the strength that our affairs would receive from it. I heard the Dutch often reckon the great advantage they had had from their banks, and they concluded that as long as England remained jealous of her Government, a bank could never be settled among us, nor gain credit among us to support itself, and upon that they judged that the superiority in trade must still be on their side.”

All these varied interests were vainly exerted to prevent the bill from receiving the royal sanction; and the Bank of England, founded on the same principles which guarded the banks of Venice and Genoa, was incorporated by royal charter, dated July 27, 1694. From Mr. Gilbart’s History and Principles of Banking we present the following brief analysis of this important act:

The Act of Parliament by which the Bank was established is entitled ‘An Act for granting to their majesties several duties upon tonnage of ships and vessels, and upon beer, ale, and other liquors, for securing certain recompenses and advantages in the said Act mentioned to such persons as shall voluntarily advance the sum of fifteen hundred thousand pounds toward carrying on the war with France.’ After a variety of enactments relative to the duties upon tonnage of ships and vessels, and upon beer, ale, and other liquors, the Act authorizes the raising of 1,200,000 pounds by voluntary subscription, the subscribers to be formed into a corporation and be styled ‘The Governor and Company of the Bank of England.’

The sum of 300,000 pounds was also to be raised by subscription, and the contributors to receive instead annuities for one, two, or three lives. Toward the 1,200,000 pounds no one person was to subscribe more than 10,000 pounds before the first day of July, next ensuing, nor at any time more than 20,000 pounds. The Corporation were to lend their whole capital to the Government, for which they were to receive interest at the rate of 8 per cent. per annum, and 4000 pounds per annum for management; being 100,000 pounds per annum on the whole.”

Continued.

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