BANK OF ENGLAND

Evening Star, Issue 19789, 13 February 1928, Page 13

BANK OF ENGLAND

ROMANTIC HISTORY FOUNDED BY GAMBLER ON £1,200,000 CAPITAL. Banking originated in Europe with the merchant princes of Venice, Genoa, and Naples—it did not come to England until the seventeenth century. Yet England, long before she had developed her banking system and her national bank, had become a world power in trade and commerce, says G. Godwin, in the ‘ Vancouver Daily Iprovince.’ The genius ol the Elizabethan was for adventure, spiced with hope of gain—the cult of the counting-house developed later. Long before the Bank of England started there were banks owned by merchant bankers. Child's Bank can show you books going back to 1620. Hoare’s and Snow’s are no less venerable. By one of those strange twists that make fact stranger than fiction, it was a born gambler and adventurer who fathered the idea of a national bank and brought the Bank of England into being. William Patterson was a man of astonishing courage. His father, a Dumfries lawyer, wanted to make a parson of him. The boy suggested a voyage to the Isthmus of Darien study the ways of the unconverted. The father agreed, and young Patterson set off to become, not the earnest student of Darien morals, but an amateur buccaneer and associate of pirates. POUNDED BY A GAMBLER. But he saw the possibilities of that Isthmus which old Cortes lound, and returned with a grand scheme lor forming a gigantic company to develop the isthmus, now known as Panama. Ihe scheme was frowned upon in England, but Scotland took it up, subscribed half the money in the country, and sent out 1,200 adventurers to establish a great trading colony. Disease, want, and unfriendly Spanish neighbors ended the wild adventure, Patterson returned a discredited man, Scotland was ruined. Yet he came back and fathered the greatest bank on this side of the Atlantic, at least. He advanced his scheme at. a time when the Government was hard pressed for money to prosecute their siege of Namur—they were paying 12 per cent, for it. But he was faced with bitter opposition. The goldsmiths hated the scheme, because they saw in it the possible end of high interest; and men who had grown rich contracting for the Government believed I hat a national bank would put an end to their alluring profits. “The scheme for a national bank,” says Smollett, “ has been conceived to maintain the credit and security of the Government and the increase of trade and credits.”

But many vested interests refused to see the project in that light. Ultimately, however, the charter was obtained, and the bank started operations on the same principles as those of the banks of Venice and Genoa. THE ORIGINAL CHARTER. The date of the original charter was July 27, 1694; the capital was £1,200,000; the style of the bank was—The Governor and Company of the Bank of England. The bank was required to lend its capita] to the Government at 8 per cent., to receive £4,000 a year for working expenses, and to confine its banking activities to dealing in bills of exchange, gold, silver, and bullion. It was forbidden to trade in goods or merchandise. It started operations in one ball in the Mercer’s Hall, its fifty-four officials being all together in one room and placed in order of seniority, the governor, the wild and imaginative William Patterson, occupying a desk apart. in its early years the Bank of England was lampooned, jeered at, slandered, and belittled. The goldsmiths found, as they bad anticipated, that it cut their rates—the usurers hated the newcomer. CRITICAL TIMES. In 1707 the bank nearly collapsed. The Pretender was believed to be about to land with a vast army; there was a rush, but tiie Government backed the band, and it weathered the storm—a close shave.

In the reign of George I. the Bank of England again experienced a financial crisis and again survived. But before it burst, the South Sea Bubble had reduced commercial and financial England to chaos. In ]7ll Robert Harley, Earl of Oxford, founded the South Sea Company to take over England’s floating debt of £'10,000,000. The Government granted 6 per cent, and the company was given the monopoly of trading with the South Americans. One of tlie few statesmen who did not lose his head during that wild scramble for wealth was Sir Robert Walpole. The whole country went mad.

_ When critics spoke their doubts excited merchants pointed to the success of the Mississippi Company, which was said to be making France wealthy beyond the dreams of avarice. That the Mississippi “ bubble ” germinated in the brain of a certain reprieved malefactor, Law, a, red-hoadcd Scot, was not generally known. George I. then suggested that the company should take over the whole debt of England—£3l,ooo,ooo. The Bank of England humbly asked to be given the business—it was ignored. SOUTH SEA BUBBLE.

’Change Alley became the centre of England the wild scheme of a, sciamble of every class of the community to invest in the South Sea Bubble and those other amazing schemes which quickly followed. Anything was good enough to lure the money from the public. There were vast flotations to convert sawdust into deal boards, to bring fresh water to the town of Deal, to confer life annuities of £IOO for a casli payment of £5. And last, that supreme audacity, “ a company for a project of great advantage, but nobody to know what.” And none of these swindles lacked money. The cry heard in ’Change Alley; “ What is there that I can buy?” became a parrot cry of the time. People formerly thrifty embarked on stupendous extravagance. The whole country was indeed mad.

Then after soaring to 800, the shares of the South Sea Bubble slumped. The Bank of England came to the rescue, inviting subscriptions for £3,000,000 to tide the “Bubble” over its difficulties. But nothing could save it—it burst, and not one family in England hut what felt the effects. Goldsmiths who had lent money to the company, private bankers, and rich merchants hurriedly left the country. The Government crashed, wholesale corruption being proved against the Chancellor of the Exchequer, Mr Aianslabie, and other members of the Government.

But the Bank of England weathered the storm. From that time on till this it continued to grow. The offices were moved from the Mercers’ Hall to bigger premises in the Grocers’ Hall. A bigger building was erected in Threadneedle street, between the Churches of St. Christopher and St. Bartholomew’s. Growing business ended in the bank acquiring the two churches and the erection of the low, long building which is to-day being removed by the housebreakers to make way for a higher and more modern building.