Bank of England Established – 4

Today’s installment concludes The Bank of England Established,
our selection by John Francis.

If you have journeyed through all of the installments of this series, just one more to go and you will have completed a selection from the great works of four thousand words. Congratulations!

Previously in The Bank of England Established.

Time: 1694
Place: London

[Continuing the passage from Burners History of His Own Times.}

The Corporation were not allowed to borrow or owe more than the amount of their capital, and if they did so the individual members became liable to the creditors in proportion to the amount of their stock. The Corporation were not to trade in any ‘goods, wares, or merchandise whatever, but they were allowed to deal in bills of Exchange, gold or silver bullion, and to sell any goods, wares, or merchandise upon which they had advanced money, and which had not been redeemed within three months after the time agreed upon.’ The whole of the subscription was filled in a few days; 25 per cent. paid down; and, as we have seen, a charter was issued on July 27, 1694, of which the following are the most important points:

That the management and government of the corporation be admitted to the governor, deputy-governor, and twenty-four directors, who shall be elected between March 25th and April 25th of each year, from among the members of the company, duly qualified.

That no dividend shall at any time be made by the said governor and company save only out of the interest, profit, or produce arising out of the said capital, stock, or fund, or by such dealing as is allowed by act of Parliament.

They must be natural-born subjects of England, or naturalized subjects; they shall have in their own name and for their own use, severally, viz., the governor at least 4000 pounds, the deputy-governor 3000 pounds, and each director 2000 pounds of the capital stock of the said corporation.

That thirteen or more of the said governors or directors (of which the governor or deputy-governor shall be always one) shall constitute a court of directors for the management of the affairs of the company, and for the appointment of all agents and servants which may be necessary, paying them such salaries as they may consider reasonable.

Every elector must have, in his own name and for his own use, 500 pounds or more capital stock, and can only give one vote; he must, if required by any member present, take the oath of stock, or the declaration of stock if it be one of those people called Quakers.

Four general courts to be held in every year in the months of September, December, April, and July. A general court may be summoned at any time, upon the requisition of nine proprietors duly qualified as electors.

The majority of electors in general courts have the power to make and constitute by-laws and ordinances for the government of the corporation, provided that such by-laws and ordinances be not repugnant to the laws of the kingdom, and be confirmed and approved according to the statutes in such case made and provided.”

When the payment was completed it was handed into the exchequer, and the bank procured from other quarters the funds which it required. It employed the same means which the bankers had done at the Exchange, with this difference, that the latter traded with personal property, while the bank traded with the deposits of their customers. It was from the circulation of a capital so formed that the bank derived its profits. It is evident, however, from the pamphlet of the first deputy-governor, that at this period they allowed interest to their depositors; and another writer, D’Avenant, makes it a subject of complaint: “It would be for the general good of trade if the bank were restrained from allowing interest for running cash; for the ease of having 3 and 4 per cent. without trouble must be a continual bar to industry.”

First in Mercers’ Hall, where they remained but a few months, and afterward in Grocers’ Hall, since razed for the erection of a more stately structure, the Bank of England conducted its operations. Here, in one room, with almost primitive simplicity were gathered all who performed the duties of the establishment. “I looked into the great hall where the bank is kept,” says the graceful essayist of the day, “and was not a little pleased to see the directors, secretaries, and clerks, with all the other members of that wealthy Corporation, ranged in their several stations according to the parts they hold in that just and regular economy.” The secretaries and clerks altogether numbered but fifty-four, while their united salaries did not exceed four thousand three hundred fifty pounds. But the picture is a pleasant one, and though so much unlike present usages it is doubtful whether our forefathers did not derive more benefit from intimate association with and kindly feelings toward their inferiors than their descendants receive from the broad line of demarcation adopted at the present day.

The effect of the new corporation was almost immediately experienced. On August 8th, in the year of its establishment, the rate of discount on foreign bills was 6 per cent.; although this was the highest legal interest, yet much higher rates had been previously demanded. The name of William Paterson was not long upon the list of directors. The bank was established in 1694, and for that year only was its founder among those who managed its proceedings. The facts which led to his departure from the honorable post of director are difficult to collect; but it is not at all improbable that the character of Paterson was too speculative for those with whom he was joined in companionship. Sir John Dalrymple remarks, “The persons to whom he applied made use of his ideas, took the honor to themselves, were civil to him awhile, and neglected him afterward.” Another writer says, “The friendless Scot was intrigued out of his post and out of the honors he had earned.” These assertions must be received with caution; accusations against a great body are easily made; and it is rarely consistent with the dignity of the latter to reply; they are received as truths either because people are too idle to examine or because there is no opportunity of investigating them.

This ends our series of passages on The Bank of England Established by John Francis. This blog features short and lengthy pieces on all aspects of our shared past. Here are selections from the great historians who may be forgotten (and whose work have fallen into public domain) as well as links to the most up-to-date developments in the field of history and of course, original material from yours truly, Jack Le Moine. – A little bit of everything historical is here.

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