GUIDE 
 
 TO 
 
 Commercial Knowledge. 
 
 B~5r B. B. T Tj i^ :isr E R . 
 
 Croivn 8vo, is. 6d. 
 
 The "Guide to Commercial Knowledge" has been compiled expressly for 
 USE IN SCHOOLS, and the following are some of the testimonies to 
 its suitability for the Class-room ; — 
 
 OPINIONS OF THE PRESS, EjC. 
 
 " We cordially recommend it to the notice of the teachers in commercial 
 schools. In less than one hundred pages Mr. Turner has cleverly contrived 
 to include a great variety of important topics. As an elementary work on 
 commercial matters it will always take a high rank." — Public Opinion. 
 
 "After reading this little book of ninety-six pages carefully, we are bound 
 to say that it is trustworthy as a guide, supplies a great deal of useful 
 information on commerce .... and is furnished with a good index." 
 
 Educational Record. 
 
 "It is true that up to the present time, notwithstanding the abundance of 
 so-called commercial academies, there are few of them indeed in which the 
 pupils receive any instruction especially calculated to prepare them for com- 
 mercial life. With this primer in his hands it will be easy for a teacher to 
 communicate much that will be useful to his charge, in the warehouse, the 
 counting-house, or the bank." — Cotton. 
 
 "What we really want, and what the author probably vvl^hes to indicate, 
 is thoroughness in teaching the fundamental principles upon which business 
 is and must be based. The book is in the form of question and answer, such 
 questions being given as might be asked by a youth just entering commercial 
 life, and the answers are such as a thorough man of business would give." — 
 Science ami Art. 
 
 " It is well adapted to its purpose, though the catechetical form into which 
 the matter is thrown will be found to be an objection to its use in many 
 modern schools. The information is trustworthy, and is concisely and 
 clearly given." — Nonconformist. 
 
 W. STEWAET & CO., LONDON.
 
 BY THE SAME AUTHOR. 
 
 Commerce and Banking. 
 
 AN INTRODUCTORY HANDBOOK. 
 By B. B. TURNER. 
 
 Second Edition, Croivn 8vo, 2s. 6d. 
 
 ©pinions of tbe ipress. 
 
 "We recommend this handy and well-printed volume as a textbook and 
 handbook of reference for j'oung men commencing business life." 
 
 Stock Ejxhaufje. 
 
 *' The mysteries of bills, bonds and cheques, of coin, notes and bullion are 
 lucidly explained." — Morning Post. 
 
 "A good deal of information which may be useful to those who are quite 
 ignorant of trade and banking methods." — Financial Ncivs. 
 
 "It is a book we have no hesitation in recommending to schools and to 
 young men about to enter a business life." — China Mail. 
 
 "Clear in method, accurate in details, and readable as a novel." 
 
 Agnostic Journal. 
 
 "A very well-planned and serviceable handbook of the elementary 
 principles and facts on which the commercial and financial systems, the 
 public and private credit of this country are built up." — Scotsman. 
 
 SWAN SONNENSCUEIN & CO., LUNDOX.
 
 CHRONICLES 
 
 BANK OF ENGLAND
 
 Si^
 
 CHRONICLES 
 
 BANK OF ENGLAND 
 
 B. B. TURNER 
 
 Clerk in the Bank of England 
 
 AUTHOR OF "commerce AND BANKING," "GUIDE TO COMMERCIAL 
 KNOWLEDGE," ETC. 
 
 WITH ILLUSTRATIONS 
 
 LONDON 
 
 SWAN SONNENSCHEIN & CO., Lim. 
 
 PATERNOSTER SQUARE 
 1897
 
 ^ KG 
 
 Cft 
 
 PREFACE 
 
 rpHE two hundredtli birthday of the celebrated 
 Old Lady of Threadneedle Street has come and 
 nf orone, and little has been said or done in com- 
 ^ memoration of the bi-centenaiy. It has occurred 
 X to me that a short history of the Bank during two 
 ^ hundred years of her existence, written in popular 
 ^ style, might be interesting to the puWic, and I 
 now trust that this humble attempt to produce such 
 a history may prove acceptable. 
 
 I am, of - course, indebted for much of the 
 ^ following information to previous writers, and -in 
 some cases, thoug-h not in all, I have stated the 
 names of those writers. I have found Mr. Francis's 
 Histovij (now out of print) and past numljers of 
 the Bankej^s Magazine very useful in the com- 
 pilation of this work. 
 
 424116 
 
 :e
 
 viii PREFACE 
 
 In closing, I should like to tender my special 
 
 thanks to H. Colin Smith, Esq., the Governor of 
 
 the Bank, for permission to take copies of pictures 
 
 belonging to the Directors; to H. G. Bowen, Esq., 
 
 the Chief Cashier, for his valuable assistance, and 
 
 to other gentlemen in the Bank who have o-iven 
 
 me help ; also to Messrs. Bradbury, Agnew & Co., 
 
 Limited, for permission to reproduce tlie picture 
 
 from Punch which will be found at the end of this 
 
 volume. 
 
 B. B. T. 
 
 LIST OF ILLUSTRATIONS 
 
 The Bank and Adjoining Bchdixgs, 1790. 
 
 The Hall .... 
 
 House of Sir John Houblon 
 
 The Old Bank .... 
 
 The Old B.\xk, Threadneedle Street Frost 
 
 Charles Price ("Old Patch") 
 
 William Banning, Gatekeeper 
 
 Political Ravishment, bt Gillray 
 
 East Facade 
 
 Bollion Court . 
 
 LoTHBURY Facade 
 
 Tete Parlour 
 
 The Rotunda 
 
 A Dirty Crossing, from "Punch' 
 
 PAGE 
 
 Frontispieee 
 . 26 
 
 • 45 
 47 
 
 . 64 
 
 . 68 
 
 . 80 
 
 . 82 
 
 . 164 
 
 . 165 
 
 • 171 
 . 226 
 . 238 
 . 278
 
 CONTENTS 
 
 CHAPTER I. 
 
 Banking before tlie Bank — Early European Banks — Lombards and Gold- 
 smiths — Royal rolibery — Banking in the time of Cromwell — Dudley 
 North and private banks — A Bank of England proposed to Govern- 
 ment—Other banks started — Paterson's career . . . Page i 
 
 CHAPTER II. 
 
 The Government in need of money — Paterson's proposition accepted — 
 Oiiposition to the Bank — Montague's and Godfrey's support — The 
 Bill passed — Success of the Loans — Epitome of the Charter — 
 Commencement of business — Death of the Deputy Governor . . 14 
 
 CHAPTER III. 
 
 Difficulties of the Bank — Re-coii iage — Tnci-ease of Capital — The En- 
 gi'afting Act — Death of VVilliamlll. — His Statue — Encroachments 
 of France — Conspiracy of the Goldsmiths — Public support — The 
 Mine Adventurers — Monopoly — Renewal of Charter — Sacheverell 
 riots — Consideration of the Queen — War alarms — Death of Queen 
 Anne — Accession of George I. — Reduction of Interest on National 
 Debt — Mississippi Bubble . . . ... 23 
 
 CHAPTER IV. 
 
 Origin of ^^]^p «r.iifli Soa, '^"np'i^^y— Pbr to transfer the National Debt 
 to the Company — Opposition of Walpole — Rivalry between the 
 Company and the Bank— Wild speculation in South Sea Stock and 
 Bubble Companies — One thousand per cent,— Downfall of the 
 Company — Punishment of the Chancellor of the Exchequer and 
 the Directors of the Company— The "Rest" — A run— New building 
 — Bank Post Bills— Renewal of Charter — Rebellion of 1745 — 
 Flight of Prince Charlie . . . ... 36 
 
 CHAPTER V. 
 
 Black Friday— Run on the Bank — Notes paid in sixpences — Merchants 
 support the Bank— The Bank supports the Government— Increase 
 of Capital — " Bank Circulation " — Origin of Consols — Issue of 
 smaller notes — Vaughan's forgery— Legal decision as to stolen 
 notes — Renewal of Charter — Robbery by a teller — Penal enactments 
 —Clearing House — Gordon Riots — Enlargement of the Bank . . 53
 
 CONTENTS 
 
 CHAPTER VI. 
 
 Old Patfli's frauds — Forged notes — Altered tellers' tifkets — Suicide of 
 Patch — George Morland under suspicion — Renewal of Charter — 
 Fen ton's frauils— Unclaimed dividends — Panic — London Missionarj' 
 Society — Bank vcrsiis Covernment — A "Solemn Resolution" — 
 Limited discounts . . . . . . Page 66 
 
 CHAPTER \ll. 
 The Loyalty Loan — Small amount of specie — Run on Country Bankers 
 — Crisis — Order in Council — Suspension of payment — Meeting and 
 support of citizens — Depreciation of bank notes and funds — Effect 
 of Pitt's policy — Inconvenience through want of cash — Issue of 
 Spanish dollars — Discussion in the House — Report of Committee — 
 Government's responsibility for the suspension — Evidence of the 
 Governor — Suspension continued till the conclusion of the war — 
 Proposed new bank — Committee of Secrecy — Voluntary contributions 
 for the war — Renewal of Charter — Astlett's frauds — Erskine's 
 defence — Abraham Newland — Bank dollars — Finance Committee 
 and reduction of profits — Notes as "Candlesticks" — A gang of 
 forgers . . . . .... 79 
 
 CHAPTER VIII. 
 The Bullion Committee — Panic — Issue of tokens —Motions in Parliament 
 — Lord King's notice — Lord Stanhope's Act — High price of gold — 
 Acts of Parliament — Conspiracy to raise price of funds — Restriction 
 Act prolonged — Increase of Capital — Notes paid in gold — Grundy's 
 action — Forged notes and capital punishment — Bank prohibited 
 from l>aying gold for notes— Statement showing surplus — The 
 Currency Bill — Act for j'l'evention of forgery — Cash jjayments 
 resumed — Turner's frauds . . . ... 97 
 
 CHAPTER IX. 
 Extension of time for small country notes — Its effect on the Bank — 
 Reduction of Interest on Navy Five Per Cents. — The Dead "Weight 
 — Clerks pensioned off — Fauntleroy's forgeries — His execution — 
 Panic of 1825 — Evidence of Bank Officials — Failure of Pole & Co. — 
 Causes of the Panic — Help rendered by the Bank — Saved by an Old 
 Box of Notes . . . . ... 114 
 
 CHAPTER X. 
 Banking Reform — Proposals of the Government — Objections and consent 
 of the Bank — Lord Liverpool's speech — Abolition of Notes under £5 
 — Money advanced on goods — Bank's monopoly curtailed — Intro- 
 duction of Joint Stock Banks — Branch Banks established — Opposition 
 of country bankers— Conversion of "New Fours" — Fears of attack 
 on the Bank — Forgery and circulation of forged notes — Opposition 
 to the death penalty — Petitions— Alteration of the law — Politics 
 and gold— Committee of Secrecy — Renewal of Charter . . .124
 
 CONTENTS 
 
 CHAPTER XI. 
 
 The War of the Banks — The Act respecting Joint Stock Banks — Forma- 
 tion of the London and AVestminster Bank— J. W. Gilbart — 
 Applications to Committee of Bankers and Bank of England refused 
 — Action brought by the Bank of England — Failure of the Governor 
 — Speculation and depression — Banks in difficulties — The Northern 
 and Central Bank— £108,000 left in a cab — Disgraceful disclosures 
 — Large advances — Specie reduced five millions — Forged Exchequer 
 Bills — Mr. Smee's improvements — Light Sovereigns — Hoarded notes 
 — The B;n|k Act. — Petitions and deputations — Provis ions of the, - 
 
 ^ Act — Kobbery of Consols . . . T" '. Page 141 
 
 CHAPTER Xn. 
 
 Alteration of Rate objected to — Speculation and panic— Railway mania 
 — Opinions on effect of the Bank Act — Committees of the Lords 
 and Commons— Causes of the Crisis — Bank Act suspended — Bank 
 rate eight per cent. — Letter from the Government — Reply of the 
 Bank — Suspension removed — Reports of the Committees — Four 
 o'clock closing — Building improvements — Splitting notes — Stolen 
 note cashed — Penalties paid by clerks — New plan for holidays — 
 Bank clerks' Library — AIv f;inrl>ii-m^fi'^ Qonversiou Bill — Discussimi 
 of Charter — Notice to open the Bank at ten o'clock — Objections of 
 private bankers . . , . ... 155 
 
 CHAPTER XIIL 
 
 A new Bank Note — Increase of note circulation — The Crimean War Loan 
 — Monetary crisis — Sowing seeds of discredit — Fictitious warrants — ■ 
 Career of J. W. Cole, of Maltby, of Davidson and Gordon— Overend, 
 Gurney & Co. and the sham warrants — Evidence of D. B. Chapman 
 and his clerk — Opinion of the jiublic — A series of frauds — Strahan, 
 Paul, & Bates — Arrest of the bankrupts — Escape and surrender of 
 Paul— Suicide of James Sadleir^His crimes — Remorse — Robsou and 
 Redpath— The Royal British Baiak — Loudon and Eastern Banking 
 Corporation — Western Branch opened . . ... 172 
 
 CHAPTER XIY. 
 
 Committee on the Bank Charter Act — Increase of deposits — Discount 
 brokers and overtrading — The Crisis of 1857 — Its cause — Failures in 
 America, Liverpool, and Scotland — Remarks of the Times— Kistiow 
 of the Bank — Great drain of gold — Letter of the Government — 
 Reply of the Bank— Disasters of the Crisis — TheBank and the Bill 
 Brokers — Another p>anie — Negotiation with the Bank of France — 
 Reduction of Government allowance — Clerks in difiiculties — Petition 
 on the currency — The Great Exhibition — Robbery from Portal's 
 mills — Trial and sentences . . . ... 192
 
 CONTENTS 
 
 CHAPTER XV. "^ 
 The Bank joins the Clearing House — Pressure, aud speculation in 
 Limited Companies — Overend, Gurney & Co., Limited — Note 
 circulation increased — Crisis — Bank failures— Failure of Overend's 
 Co. — Black Friday — Application to Government — Correspondence 
 hetween the Bank and the Government— Suspension of the Bank 
 Charter Act — Effects of the panic — Prosecution of the Overend 
 Directors — Acquittal — 0])iniou of the Lord Chief Justice — Plentiful 
 gold — War on the Continent — Bank Holidays Act — Effects of the 
 peace — Fluctuations in the Bank rate — Exhibition of Bank Note 
 paper — Forged bills at the Western Branch— How the frauds were 
 accomplished — Detection — Colouel Francis defended — Trial and 
 conviction of forgers — The Governor on the robberies . . Page 207 
 
 CHAPTER XVL 
 Quiet times — Bank Meeting — Bimetallism — The Paris Conference — 
 Attitude of the Bank — Extent of the Bank's work — An unusual 
 meeting — Address to the Queen — Subscriptions of the Bank to 
 various funds— The Directors' pay increased — Suffel v. Bank — 
 Gattie v. Bank — Gattie v. Grenfell — National Debt Conversion Act- 
 Remarkable discovery of forged notes — Saturday Early Closing . 225 
 
 CHAPTER XVn. 
 
 Increase of note issue — Conversion of the National Debt — Mr. Goschen's 
 Resolution — High pressure at the Bank — Sir Mark Collet — High 
 price of Bank Stock— Robbery by an agent — Detection and flight — 
 Opening of the Law Courts Branch — Answers' prize — Scene at the 
 Threadneedle Street entrance — Light gold called in — Gold-weighing 
 machines — Position of the Bank in regard to interest on deposits-^ 
 Bank of England Club — Re Vagliano Bros. ' appeal to the House of 
 Lords . . . . .... 241 
 
 CHAPTER XVIIL 
 The Vagliano case— Glyka's forgeries — Action in Courtof Queen's Bench 
 — Judgment — The Bank appeal — Appeal dismissed — Public opinion 
 — Bank of England x. Vagliano Bros, in the Lords — Final victory of 
 the Bank — Threatened panic — The Baring crisis — The Barings — 
 Argentine finances — Collapse of Baring Bros. & Co. — Application to 
 the Bank — Action of the Bank — Guarantee fund — The new Baring 
 Company — Praises awarded to the Bank — Freedom of the City to 
 Mr. Lidderdale — Banquet at tlie Mansion House — Barings' enormous 
 liabilities— Run on the Birkbeck Bank — Queensland loan controversy 
 — Management of the National Debt — Increase of Governors' 
 Salaries . . . . ... 256 
 
 CHAPTER XIX. 
 Increase of note issue — Women Clerks— Building alterations — Daily 
 and Nightly Watch — Resignation of the Chief Cashier — Criticisms 
 and Comments— PziJic/t's cartoon — NeAv appointments — Conclusion 275
 
 CHRONICLES 
 
 BANK OF ENGLAND 
 
 CHAPTER I. 
 
 Banking liefore the Bank — Early European Banks — Loniljards and 
 Goldsmitlis — Royal robl^ery— Banking in the time of Cromwell — 
 Dudley North and Private Banks — A Bank of England proposed to 
 Government — Other Banks started — Paterson's career. 
 
 THE Bank of England, the greatest monetary 
 institution of the world, was incorporated by 
 Act of William and Mary in the year 1694, and 
 commenced business on January 1st, 1695. \ 
 
 In order properly to understand its history one 
 must realize the times and circumstances in which 
 it arose. Such wonderful progress and development 
 have taken place during the last two hundred years 
 that it is almost as difficult to transport oneself 
 in imao-ination to the scenes of 1694 and the few
 
 EARLY HISTORY 
 
 preceding years as it would be to realize the Britain 
 of the Romans or the Saxons. Nevertheless we will 
 endeavour in this chapter to look at the condition 
 of l)anking in the days before William Paterson's 
 scheme of a National Bank was accepted as a matter 
 of " practical politics." 
 
 As I have stated in a former work/ " Banks had 
 existed in some continental countries for some 
 hundreds of years, and as the commerce of Britain 
 increased, the want of a National Bank was felt in 
 this country. The Bank of England has succeeded 
 to the position formerly held by the Bank of 
 Amsterdam as the monetary centre of the world." 
 Although the Bank of Amsterdam had, in 1694, 
 only existed about eighty years, some of the banking 
 institutions of Europe date from a much earlier 
 period. The earliest European Bank was established 
 at Barcelona about the year 1400, and the Bank 
 of Saint George was founded at Genoa some 
 fifty years later. Private banks are of greater 
 antiquity. The Lombard Jews commenced banking 
 in Italy in the year 808. Some of these Lombards 
 afterwards came to London and settled in the 
 narrow thoroughfare which is called, after them, 
 
 ' Cornmerce and Banking.
 
 THE BANK OF ENGLAND 
 
 Lombard Street, and which is to-day a street of 
 banks. 
 
 In the sixteenth century merchants and bankers 
 (or goldsmiths as they were then called) kept their 
 surplus cash in the Exchequer and the Mint. In 
 the opinion of some writers ^ the financial dodges 
 of previous monarchs — the two Charleses and James 
 II. — prepared William III. and the nation for 
 founding and accepting the new Bank. In 1640 
 Charles I. , being out of favour, was refused a loan by 
 the City of London. Being in urgent need of money 
 he hit upon the expedient of seizing the sum of 
 £200,000 which had been lodged in the Mint and 
 compelling the owners to consider it a loan. By 
 this stretching of the " divine right of kings " many 
 goldsmiths were ruined. A similar robbery was 
 committed in the year 1672 by Charles II. on 
 a larger scale and with more disastrous results. 
 The bankers were in the habit of depositing their 
 surplus floating capital in the Exchequer and with- 
 drawing their money once a week in order to 
 meet their engagements. Charles wanted to raise 
 £1,500,000 without applying to Parliament, and 
 on the suggestion of Sir Thomas Clifford, who was 
 
 ^ E. E. Whitfield, in Commercial Science.
 
 EARLY HISTORY 
 
 acting in the French and Papal interest, he helped 
 himself to that sum out of the Exchequer funds 
 belonginor to the bankers. When this was done 
 both the bankers and their customers were ruined, 
 and a general suspension of payments resulted. 
 In 1690 James II. debased the currency by coining 
 old guns, brass, pewter, etc., and made a weight 
 of metal which was only worth threepence or 
 fourpence pass current for ten pounds sterling. 
 When we consider to how great an extent com- 
 mercial prosperity depends on the stability of 
 public credit, we can understand how such acts 
 of royal robbery prepared the people to welcome 
 the reforms of banking and currency which William 
 supported. 
 
 The above were only some of the causes which 
 led to the establishment of the Bank. The failure 
 of some of the goldsmiths caused the merchants 
 to lose considerable sums of money and drew 
 attention to the necessity for a stronger basis of 
 credit. During the Protectorate of Cromwell bank- 
 ing developed to a great extent. It was then that 
 the modern system of payment by cheque and bank- 
 notes originated or, at any rate, came into pretty 
 general use. Merchants and others deposited their
 
 THE BANK OF ENGLAND 
 
 money with the goldsmiths and received from them 
 receipts or "cash notes." These were called "gold- 
 smiths' notes," were payable on demand, and w^ere 
 transferred from one holder to another in payment 
 of debts. One Samuel Lamb (Thorold Rogers says 
 John Lambe) in 1656 and again in 1658 tried to 
 induce Cromwell to establish a National Bank, but 
 he was unsuccessful. Possibly the Protector had 
 as much business on hand at the time as he could 
 well manage, and his death in the latter year put 
 an end to the project. 
 
 Macau lay, in his History of England, gives a 
 graphic account of the condition of banking prior 
 to the establishment of the Bank of England ; but 
 occasionally that brilliant writer appears to have 
 been carried away by his own eloquence. He states 
 that, " In the reia;n of William old men were still 
 living who could remember the days when there 
 was not a single banking - house in the city of 
 London. So late as the time of 'the Restoration 
 every trader had his own strong box in his own 
 house, and when an acceptance was presented to 
 him, told down the crowns and the caroluses on his 
 own counter." No doubt the old-fashioned ways 
 of business had not then quite died out, and many
 
 EARLY HISTORY 
 
 people probably, like Sir Dudley Nortb, preferred 
 the old ways to the new ; but more than one of 
 the banking-houses still existing in and near the 
 city were doing business more than a century before 
 the days of William III. The Bank of Child & Co., 
 in Fleet Street, dates back to the year 1559 — more 
 than a hundred years before the establishment 
 of the Bank of England. Martin's Bank, of 68, 
 Lombard Street, is said to have been founded by Sir 
 Thomas Gresham in the reign of Queen Elizabeth. 
 The Grasshopper, whose effigy still surmounts the 
 Eoyal Exchange, was the sign by which Martin's 
 Bank was known until 1770. Gosling's and Hoare's 
 Banks, in Fleet Street, are mentioned as being in 
 existence in the years 1650 and 1677 respectively.^ 
 The new system grew in favour, notwithstanding 
 the opposition and protests of the Dudley Norths. 
 The aforesaid Sir Dudley North was in a weak 
 moment induced to put some of his money into 
 one of the Lombard banking-houses. Unfortunately 
 the Lombard Street man failed, and although Sir 
 Dudley lost only fifty pounds his dislike to the 
 new banking system was greater than ever, and 
 he continued to caution his friends against the 
 
 1 Hamlbook of London Bankers^ by Hilton Price.
 
 THE BANK OF ENGLAND 
 
 pitfalls that were laid to entrap them. This opposi- 
 tion, however, was vain ; as Macaulay says, " The 
 advantages of the modern system were felt every 
 hour of every day in every part of London, and 
 the people were no more disposed to relinquish 
 those advantages for fear of calamities which 
 occurred at long intervals than to refrain from 
 building houses for fear of fires, or from building 
 ships for fear of hurricanes." 
 
 Private banking being now thoroughly established, 
 people again discussed the desirability of having a 
 National Bank, and several schemes were pro- 
 mulgated. In 1683 a Bank of Credit was opened 
 at Devonshire House, Bishopsgate Street. Customers 
 deposited goods and were furnished with bills to the 
 amount of three-fourths of their value. In order 
 to render these bills current an association w^as 
 formed of members of different trades, who agreed 
 to accept these bills instead of cash in payment for 
 goods. In 1691 William Paterson submitted to 
 the Government a plan of a National Bank, and 
 although his plan was favourably received by both 
 politicians and merchants, nothing came of it at 
 that time. 
 
 A plausible, but much less business-like proposal,
 
 EARLY HISTORY 
 
 however, did find acceptance. In December, 1693, 
 a Mr. Chamberlayne submitted to the House of 
 Commons his plan, which he called the Land Bank. 
 Absurd as it may seem, he undertook to raise eight 
 thousand pounds on every freehold estate of a 
 hundred and fifty pounds which should be brought 
 into his bank, and this without dispossessing the 
 freeholders. Although such an estate would not 
 fetch more than three thousand pounds in the 
 market, the bait took, and the Land Bank gave some 
 trouble in after years to the young Bank of England. 
 Chamberlayne's Bank had but a short life, it failed 
 in 1696. 
 
 All this time a man was working and thinking 
 whose ideas were to produce lasting effects on the 
 history of this country and on the finances of the 
 world. His name was William Paterson, and a 
 short sketch of his life may not be out of place 
 here. He was the son of a farmer of Skipmyre, in 
 the parish of Tinwald, Dumfriesshire, and was born 
 in April, 1658. He had considerable inventive 
 power, a good knowledge of finance, and great 
 energy and perseverance. One of his ventures, the 
 Darien Company, involved others as well as himself 
 in great disaster ; but probably that gigantic failure
 
 THE BANK OF ENGLAND 
 
 was due to the dissensions and follies of others 
 rather than to any fault of his own. He was 
 probably brought up a Puritan, for we are told that 
 early in life he left his home joartly to escape from 
 religious persecution and partly from a desire for 
 a wider field of life. He started off with a pedlar's 
 pack, travelled through England, and for a short 
 time settled in Bristol. Afterwards he went to the 
 West Indies and lived chiefly in the Bahamas. As 
 little was known of that period of his life, scandal 
 had something to say about it. He was said to have 
 been both preacher and buccaneer. " His friends 
 said he had been a missionary, his enemies that he 
 had been a buccaneer." Before he was twenty- 
 nine years of age he was back in Europe, and 
 tarried in Hamburg, Berlin, and Amsterdam. It 
 was in the last - named city, in the year 
 1687, that he first made known his Darien 
 colonization scheme, and in 1690 he was associated 
 with others in the formation of the Hampstead 
 "Water Works. In 1691 he submitted to the 
 Government his plan for a National Bank, at that 
 time with no practical result. In 1694 he was a 
 director of the newly-formed Bank of England, but 
 his name only appeared in the list for a short time.
 
 EARLY HISTORY 
 
 In the same year he published his plan for a colony 
 at Darien, and suggested the formation of a company 
 to be called "The Company of Scotland for trading 
 to Africa and the Indies." Paterson had become 
 acquainted with the Isthmus during his stay in the 
 West Indies ; he was enamoured of its natural 
 advantages, and soon begac to contemplate its 
 colonization. 
 
 The Isthmus of Darien or, as it is now generally 
 called, Panama, brought loss and misfortune to 
 Scotland through the "Company" two centuries 
 ago on a similar, if smaller scale, to that it brought 
 recently to France by means of the "Canal." And 
 some of the reasons put forward for the construction 
 of the Panama Canal were almost identical to those 
 given for settling a Scotch colony on Darien. Its 
 central position as a place of trade between East 
 and West was dwelt upon. Paterson wrote, " The 
 expense of navigation to China, Japan, the Spice 
 Islands, and the' greatest part of the East Indies 
 will be lessened more than half, and the consumption 
 of European commodities and manufactures will 
 soon ])e mor6 than doubled. Trade will increase 
 trade, money will beget money, and this trading 
 world shall need no more to want work for their
 
 THE BANK OF ENGLAND 
 
 hands, but will rather want hands for their work." 
 So it seemed to Paterson and to others, and so it 
 might have been if events had been favourable. 
 The new company was to become a second East 
 India Company. The king and the English people 
 at first gave it some support, but the patronage of 
 the former was withdrawn, as Parliament, stirred up 
 by the East India Company, opposed the scheme. 
 Paterson then turned to Scotland. His proposal was 
 taken up with enthusiasm by his fellow-countrymen, 
 and Edinburgh was mad with excitement ; all classes 
 in the country rushed to subscribe to the fund ; the 
 sum of £400,000, a large amount for Scotland in 
 those days, was subscribed. The company was 
 formed in 1695, and by July 26th, 1698, five vessels 
 had sailed from Leitli carrying twelve hundred 
 persons, many of them ])eing men of birth and 
 influence. The loss of a considerable sum of money 
 prevented Paterson being employed by the company 
 in any official capacity, so, taking his wife with him, 
 he joined the expedition as a private individual. 
 Paterson purchased land of the Indians, and the 
 colonists built a fort and established a" station, but 
 troubles came thick and fast ; the Spaniards opposed 
 and harassed the new settlement ; provisions that
 
 EARLY HISTORY 
 
 should have reached them in good time were 
 delayed ; quarrels arose among the settlers ; scarcity 
 of food and the unhealthy climate brought sickness 
 and death, and finally the remains of the company 
 which had gone out in such joy and confidence 
 returned dispirited to Scotland. Mrs. Paterson had 
 died, and Paterson himself Wcis so ill that he had 
 to be carried on board ship. He reached home in 
 December, 1699. On recovering his health he did 
 his best to prevent the entire failure of the colony, 
 and tried to induce King William to enter on a new 
 Darien expedition. He then made a proposal for 
 a Company of Trade to develop the resources of 
 Scotland. In 1700 he removed to London and 
 helped to establish the Union of the two Crowns. 
 One of the last acts of the Scottish Parliament was 
 to recommend him to Queen Anne for recognition of 
 all he had done and suffered. He was afterwards 
 returned to the United Parliament at Westminster 
 as member for the Dumfries burghs. Paterson was 
 now getting on towards sixty, and had had great 
 losses. It was admitted in England as well as in 
 Scotland that his services should receive some public 
 acknowledgment and reward. Government decided 
 to take the matter in hand, but was slow in carrying
 
 THE BANK OF ENGLAND 13 
 
 out its good intentions. Two or three sums of £50 
 to £100 stand in Paterson's name in the Queen's 
 Bounty Lists of 1712 and 1713. In 1715 Parlia- 
 ment ordered that the sum of £18,241 IO5. lOc^. 
 should be paid to him, but he found some difficulty 
 in obtaining it, if indeed he ever succeeded in doing 
 so. He died in London on January 22nd, 1719, in 
 the sixty-first year of his age.
 
 CHAPTER II. 
 
 1694-1695 
 
 The Government in need of money — Paterson's proposition accepted — 
 Opposition to the Bank— Montague's and Godfrey's support— The 
 Bill passed — Success of the loan— Epitome of the Charter — 
 Commencement of business — Death of the Deputy-Governor, 
 
 AS previously stated, Paterson first laid his 
 - scheme for a National Bank before the Ministers 
 in 1691. Nothing was done for three years. In 
 1694, in consequence of the expense of the war 
 with France, the Government were in urgent need 
 of funds in order to complete the Estimates for the 
 year. After imposing all possible taxes, there was 
 stiU a deficit, so it was decided to borrow the 
 lacking amount. One million was raised by a 
 lottery loan. Another million was required, and 
 that it was resolved to raise by means of Paterson's 
 proposed bank. 
 
 All reforms and great inventions that have tended 
 to shake settled beliefs or to upset established 
 methods have had to contend with bitter prejudice 
 
 14
 
 THE BANK OF ENGLAND 15 
 
 and violent opposition. It has been so in religion, 
 in science, and in politics, in tlie introduction of 
 machinery to manufactures, and in the adoption 
 of railways. It was so to some extent when it 
 was proposed to establish a National Bank in 
 England. That a radical change was needed in 
 our monetary system was manifest to many. 
 After the Revolution, William's Government was 
 continually in straits for money. The usual mode 
 for obtaining advances was for the Government to 
 apply to the Corporation of the city, and the officials 
 of the Corporation applied to the separate wards 
 to supply in smaller sums the amount they had 
 advanced to the State. Thus it was that interest 
 and premiums were paid to the extent of 25 and 
 30 per cent., and the trader found his pocket filled 
 at the expense of the j^ublic.^ The promoters of 
 the Bank proposed to rectify this state of affairs, 
 and strenuous opposition was the result. The 
 capitalist and the money-lender opposed from fear of 
 diminished profits ; the goldsmith or private banker 
 because he foresaw the curtailing of his privileges ; 
 the Tory opposed because he knew that the more 
 easily the Whig Government found the means of 
 
 1 History of the Bank of England, by John Francis.
 
 I 6 1694-1695 
 
 carrying on the war the less likelihood was there 
 of William's authority being overthrown and the 
 house of Stuart being restored. Paterson some 
 years afterwards wrote : " The erection of this 
 famous Bank not only relieved the Ministerial 
 managers from their frequent processions into the 
 city for borrowing 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 towards 
 the peace concluded in 1697." 
 
 Mr. Godfrey, the first Deputy Governor of the 
 Bank, in a pamphlet published about this time, said 
 that " all the several companies of oppressors are 
 strangely alarmed, and exclaim at the Bank, and 
 seem to have joined in a confederacy against it 
 out of pure zeal (as they pretend) for the good 
 of the publick ; whereas 't is nothing but their 
 private interest that has so settled them, to see 
 their crafts and trades of oppression endangered ; 
 for extortion, usury, and oppression were never so
 
 THE BANK OF ENGLAND 17 
 
 attacqued as they are like to be by the Bank, and 
 'tis that which has eno-ao-ed tliem to use all the 
 arts and tricks they could invent to blemish it, . . . 
 There are others who pretend to be against the Bank, 
 lest it should hereafter joyn with the prince to make 
 him absolute, and so render Parliaments useless." 
 
 Paterson's two principal supporters were Mr. 
 Montague, the Chancellor of the Exchequer, and 
 Mr. Michael Godfrey, one of the richest and most 
 esteemed merchants of London. The former exerted 
 his influence in the House of Commons, and the 
 latter in the city. X^fter Mr. Paterson's plan had 
 been approved by the Committee of AYays and 
 Means, a Bill, the title of wdiich caused some 
 amusement, was brought in and passed. " It was, 
 indeed " (wrote Macaulay), " not easy to guess that 
 a Bill, which purported only to imjDOse a new duty 
 on tonnage for the benefit of such persons as should 
 advance money towards carrying on the war, was 
 really a Bill creating the greatest commercial insti- 
 tution that the world had ever seen." The Bill 
 authorized the Government to borrow £1,200,000, 
 at 8 per cent. Eight per cent, seems to us now 
 to be good interest, but then it was considered 
 very moderate, for money was dearer in those days, 
 c
 
 1 8 1 694- 1 695 
 
 and the credit of the Government was not nearly so 
 good as it is now. Something more was needed 
 to get the public to advance the required sum 
 promptly at that rate of interest, therefore, as an 
 inducement to capitalists to come forward, the 
 subscribers to the loan were to be incorporated by 
 the name of the Governoi' and Company of the 
 Bank of England. This corporation was to have 
 no monopoly, and was restricted from trading in 
 anything except bills of exchange, bullion, and 
 forfeited pledges. The monopoly the Bank after- 
 wards possessed in being the sole Joint Stock Bank 
 was not conferred until the reign of Queen Anne. 
 The Act 5 and 6 William and Mary, c. 20, received 
 the Royal Assent, and the Charter was dated 
 July 27th, 1694. The sum of £1,200,000 asked 
 for was subscribed in a few hours by about forty 
 London traders. The motives which contributed 
 to the rapid success of the loan were political as 
 well as financial, for the Whig party, which favoured 
 the exclusion of the house of Stuart, were the 
 leaders of the movement.^ For many years after 
 its formation the Bank was a steady supporter of 
 the Government. 
 
 1 Introduction to the Commercial Sciences, by E. E. Whitfield, M.A.
 
 THE BANK OF ENGLAND 19 
 
 A copy of the Bank Charter in extenso would 
 occupy many pages of this work ; we will, therefore, 
 be content with a record of some of the more 
 important features of 
 
 " The Charter of the Corporation of the Governor and 
 Company of the Bank of England." 
 
 "William and Mary, by the grace of God King and 
 Queen of England, Scotland, France, and Ireland, 
 Defenders of the Faith, &c. To all to whom these 
 presents shall come, greeting." 
 
 1. The rates and duties upon tonnage of ships and vessels, 
 and upon beer, ale, and other liquors, are made security to 
 such persons as shall voluntarily advance the sum of fifteen 
 hundred thousand pounds towards carrying on the war 
 against France. 
 
 2. To incorporate all and every such subscribers and 
 contributors, their heirs, successors, or assignees, to be one 
 body corporate and politic, by the name of The Governor 
 and Company of the Banh of England. 
 
 3. Sir William Ashhurst, Kt., Lord Mayor of London, and 
 others, are appointed Commissioners to receive subscriptions, 
 to be made on or before August 1st, 1694. 
 
 4. The board of management to consist of a governor, 
 a deputy governor, and twenty-four directors ; the governor 
 or deputy governor and any thirteen directors (or more of 
 them) to be called a court of directors for the ordering 
 .... the affairs of the said corporation. Sir John Houblin, 
 Kt., and Micliael Godfrey, Esquire, are appointed the first
 
 20 I 694- I 695 
 
 governor and deputy governor respectively. The first 
 directors are also appointed ; among them appears the name 
 of William Paterson. 
 
 5. The forms of oaths are given for the swearing in of the 
 governors and directors and for other members of the said 
 corporation, having each five hundred pounds or more interest 
 or share in the capital stock before they shall be capable to 
 five any vote in any general court. " Provided, nevertheless, 
 that any person or persons, commonly called or known to be 
 Quakers . . . shall and may instead of the oaths hereby 
 prescribed . . . solemnly promise and declare . . . and 
 subscribe the same together with the declaration appointed 
 for such dissenters as scruple to take oaths, by another act 
 made in the first year of our reign, entitled, An Act for 
 exempting their Majesties' Protestant subjects dissenting from 
 the Church of England, from the Penalties of certain laws. . . ." 
 
 6. Eegulations as to making dividends. 
 
 7. Provides for general courts being summoned from time 
 to time upon demand of nine or more members, each of 
 them holding £500 or more stock. 
 
 8. Power given to governors and directors to make bye- 
 laws. 
 
 9. Regulations made and forms given for transfer of 
 stock. 
 
 The Bank had now a legal existence, and prepara- 
 tions were soon made for the commencement of 
 business. At this early period of its history the 
 secretaries and clerks numbered fifty-four persons, 
 and their salaries during the first year amounted
 
 THE BANK OF ENGLAND 
 
 only to £4350, giving an average of about £80 \\s. 
 each. "The Bank" as a building did not yet exist. 
 The Corporation for a few months used the Mercers' 
 Hall, and afterwards removed to the hall of the 
 Grocers' Company, where they opened the Bank 
 to the public on January 1st, 1695, and bank-notes 
 were issued, the lowest amount being £20. 
 
 In that year the directors lost their deputy 
 o-overnor in a sudden and remarkable manner. 
 William was at the seat of war. The allied armies 
 had suffered reverses and had to retreat before the 
 soldiers of Louis. The Bank supplied needed funds 
 which greatly contributed towards changing defeat 
 to victory. Michael Godfrey left England to make 
 arrangements with the king for the conveyance 
 of specie to the army. William was actively engaged 
 in the siege of Namur, and Godfrey, anxious to 
 forward his mission as speedily as possible, and 
 perhaps also to see something of the fight, visited 
 the king in the trenches. William, who was always 
 ready bravely to hazard his own life in doing his 
 duty, greatly disliked others to run needlessly into 
 danger. When the civilian, the deputy governor, 
 presented himself before him, he exclaimed, 
 ' ' Mr. Godfrey, you ought not to run this hazard ;
 
 22 I 694- I 695 
 
 you are not a soldier, and can be of no use to us 
 here." "Sire," said Mr. Godfrey, "I run no more 
 risk than your Majesty." " Not so," replied the 
 king, " I am where it is my duty to be ; and I may 
 without presumption commit my life to God's 
 
 keeping, but you " Before the sentence was 
 
 completed a cannon ball from the ramparts laid 
 Mr. Godfrey dead at the king's feet. His body 
 was brought over to England and buried in St. 
 Swithin's church, near the Bank of England.
 
 CHAPTER III. 
 
 1696-1720 
 
 Difficulties of the Bank — Re-coinage — Increase of Capital — The 
 Engrafting Act — Death of William III. — His Statne — Encroach- 
 ments of France— Conspiracy of Goldsmiths — Pulilic Support — 
 The Mine Adventurers — Monopoly — Renewal of Charter — 
 Sacheverell Riots — Consideration of the Queen — War alarms— 
 Death of Queen Anne — Accession of George I. — Reduction of 
 interest on National Debt — Mississippi bubble. 
 
 ^VTOW that the Bank had so far overcome its 
 ■^^ initial obstacles and was in working order, it 
 must not be supposed that all its affairs were "as 
 merry as a marriage bell." The days had not yet 
 arrived when the proprietors should meet only once 
 every half year for the purpose of hearing a report 
 and agreeing to a dividend ; on the contrary, they 
 were often called tooether to share with the directors 
 their responsibility and to decide with them what 
 steps should be taken in cases of emergency. The 
 time had not yet come wdien "safe as the Bank" 
 should become a proverb, for in the third year of the 
 life of the corporation it was compelled to suspend 
 
 23
 
 24 1696-1720 
 
 payment. Several causes combined to bring about 
 that suspension, among them being tlie dislocation 
 of business consequent upon the failure of the Land 
 Bank, and the troublesome, but necessary, re-coinage 
 of silver. The silver coin of the realm was in a 
 disgraceful condition, the result of years of neglect 
 and bad practices. The debased gun-metal money 
 of James II., the continued clipping and filing of the 
 better coins, and the large amount of counterfeit coin 
 (also clipped and filed to represent the real) in 
 circulation had reduced tlic currency to such a 
 disgraceful and inconvenient condition, that the 
 Government resolved at all costs to put it right. 
 Sir Isaac Newton, the Master of the Mint, w^as the 
 moving spirit in the business. As the Bank had 
 taken the clipped money at its nominal value, they 
 were involved in considerable loss when the old 
 coins were called in, many of the shillings con- 
 taining only three-pennyworth of silver, andVkhen 
 the notes issued in exchange for them came in 
 there was a great scarcity of cash in consequence 
 of the re-coinage being then in process, so that 
 the Bank had not sufiicient in hand to meet all 
 demands. They therefore paid portions of the 
 notes only in cash at regular intervals, but their
 
 THE BANK OF ENGLAND 25 
 
 credit was now so o-ood that tlieir creditors re- 
 ceived sealed bills bearing interest instead of specie. 
 The directors made every effort to bear the strain 
 put upon them ; two separate culls of twenty per 
 cent, each were made upon their shareholders ; 
 sealed bills bearing six per cent, interest were given 
 in exchange for bank-notes ; Exchequer bills for 
 £5 and £10 were issued and were passed as cash; 
 they also during the re-coinage allowed persons who 
 chose to keep an account with the Bank to " trans- 
 fer any sum under £5 from his own to another 
 man's account." When these difficulties were over 
 the Government authorized the Bank to add 
 £1,001,171 105. to the original Stock, four-fifths 
 of the subscriptions being received in tallies and 
 orders, and one-fifth in bank-notes at their full 
 value, and the Charter, subject to certain altera- 
 tions, was prolonged to August, 1710, and beyond 
 that period in the event of the Government debt 
 to the Bank not being repaid Ijy that date. The 
 tallies had been at 40, 50, and 60 per cent, discount, 
 and bank-notes at 20 per cent. This engrafting 
 act, as it was called, was framed for the restoration 
 of public credit, and it effected that by the rescue 
 of the Exchequer tallies and orders from the stock-
 
 26 I 696- 1720 
 
 jobbing harpies who had preyed upon the public, 
 and by cancelling the depreciated bank-notes. By 
 the same Act of Parliament forgery of the Bank's 
 seal, notes or bills was made felony without benefit 
 of clergy. 
 
 Probably the affairs of the Bank now progressed 
 for a time with comparative smoothness, as there is 
 nothing particular to record of the next few years. 
 Early in 1702 the Bank lost its earliest royal patron 
 by the death of William III. Though more of a 
 Dutchman than an Englishman, and never a popular 
 monarch, he benefited England by his vigorous 
 adherence to the Protestant cause and by the 
 impetus he gave to the j^i'ogress of financial order 
 and commercial jjrosperity in founding and support- 
 ing the Bank of England. His statue in marble 
 may be seen in the hall of the Bank just by the 
 door of the Treasury. It was erected in 1735. 
 The king is draped in Roman costume, and stands 
 on a pedestal on which is an inscription in Latin. 
 This may be some excuse for the illiterate person 
 who was showing a stranger through the building, 
 saying (in the hearing of the present writer), " That 
 is a statue of Julius Csesar ! " 
 
 During the first years of the new century the
 
 THE BANK OF ENGLAND 27 
 
 encroachments of France alarmed the whole of 
 Europe, and adversely affected the public credit 
 in this country. The credit of the Bank was 
 usually in sympathy with that of the Government, 
 so on this occasion also that institution suffered 
 from the strain. In the year 1700 Louis, under 
 the pretence of a will in favour of his grandson, 
 annexed the kingdom of Spain to his dominions. 
 Again in 1704, in . consequence of an insurrection 
 in Hungary and the invasion of Germany l)y the 
 French, the public were greatly alarmed, the funds 
 went down, and there was a great demand for 
 specie, so that the directors again were under the 
 necessity of issuing sealed l)ills bearing interest, in 
 order to support their credit. But brighter times 
 soon returned in consequence of the successes of 
 the Fleet and Army of England. On July 21st, 
 1704, x\dmiral Rooke attacked Gibraltar and cap- 
 tured the fortress six days later. On August 13tli 
 the brilliant victory of Blenheim was won by the 
 Duke of Marlborough with the allied forces. 
 
 The bright days of the Bank, however, were not 
 of long duration. In 1707 great preparations were 
 made in France, under the patronage and with the 
 assistance of the Pope and Louis XIV., for the
 
 28 I 696-1720 
 
 invasion of our shores by the Pretender. As soon 
 as an invasion was anticipated by the public the 
 price of funds declined 14 per cent., a great de- 
 mand for gold arose, and a run on the Bank appeared 
 probable. The danger to the Bank was intensified, 
 according to report, by a conspiracy against it, 
 formed by some of the goldsmiths of Fleet Street. 
 One of these firms amassed a large number of bank- 
 notes, and another saved up as many as amounted 
 to £100,000, with the object of demanding payment 
 for them all at once. 
 
 The friends of the Bank were as ready to defend 
 that institution in time of danger as others were 
 to attack it. A call of 20 per cent, was made 
 on the proprietors. The Queen, through the Lord 
 Treasurer, informed the directors that she would 
 allow 6 per cent, interest on their sealed bills for 
 six months. Many of the nobility offered to 
 advance considerable sums of money ; other persons 
 having accounts with the Bank, instead of withdraw- 
 ing their deposits when the run commenced, paid 
 in as much as possible. One man, who had only 
 £500, took it to the Bank ; on hearing of this the 
 Queen sent him £100 and gave him the security 
 of the Treasury for the repayment of the whole
 
 THE BANK OF ENGLAND 29 
 
 £500. By this means the Bank was enabled to 
 tide over another period of difficulty and preserve 
 its credit. In 1708 the proposal to renew the Bank 
 Charter till 1732 gave rise to much discussion, and 
 pamphlets for and against the Bank issued from 
 the press. One form of opposition to the Bank's 
 interests took a more than verbal shape. A number 
 of persons, including several peers, formed them- 
 selves into a Company under the style of the 
 Company of Mine Adventurers, and conducted the 
 business of a bank, issued notes, and circulated 
 bills. The Mine Adventurers did not adventure 
 long. Sir Humphrey Macks worth, the projector 
 and moving spirit of the concern, was tricky and 
 unscrupulous. By his fraudulent practices he 
 hastened the fall of the Company, which never had 
 any stability. He falsified the accounts, bought 
 lead from other mines which he represented to 
 have come from his Company's mine, and bought 
 silver which he sent to the Mint as having been 
 extracted from his Company's lead. When the 
 trickery was discovered he was censured by the 
 House of Commons as beino; o-uiltv of " scandalous 
 frauds," and a bill was passed to prevent his leaving 
 the country. But Sir Humphrey was a Tory, so
 
 30 1 696-1720 
 
 his friends in the House of Lords opposed the bill, 
 and it was thrown out. It was partly in conse- 
 quence of the rivalry of the Company of Mine 
 Adventurers that the clause which gave the Bank 
 of England a monopoly in constituting it the only 
 joint-stock bank in England was inserted in the 
 Act. This monopoly took eiTect in 1709, and con- 
 tinued unaltered till the reign of George IV. The 
 clause is as follows : " That during the continuance 
 of the said Corporation of the Governor and Com- 
 pany of the Bank of England, it shall not be lawful 
 for any body politic or corporate whatsoever, created 
 or to be created, other than the said Governor and 
 Company, or for any other persons whatever, united 
 or to be united in covenant or partnership, exceeding 
 the number of six persons in England, to borrow, 
 owe, or take up any sum or sums of money on their 
 bills or notes payable on demand, or at a less time 
 than six months from the borrowing thereof." 
 
 The extension of the Charter has usually been 
 conducted as a kind of bargain. The Government 
 confers certain privileges upon the Bank, and in 
 return the Bank gives some accommodation to the 
 Government. In 1708 the agreement was come 
 to in consideration of the Bank enabling the
 
 THE BANK OF ENGLAND 31 
 
 Government to circulate Exchequer bills on the 
 security of the house duties. To effect this object 
 the Bank undertook to cancel £1,500,000, the 
 interest being 6 per cent, until redemption of the 
 principal. The principal and interest together 
 amounted to £1,775,027 17s. lOjd This was the 
 first occasion on which the Bank undertook the 
 circulation of Exchequer bills. In addition to this 
 the Bank agreed to advance £400,000 to the Govern- 
 ment without interest. More money was required 
 in order to meet these expenses ; a call on the 
 proprietors of 15 per cent, brought in the sum of 
 £656,000 odd, and subscription lists were opened 
 for upwards of tw^o millions. The increased confi- 
 dence which the public had in the Government 
 and the Bank is shown by the fact that a great 
 crowd of people came to invest their money, the 
 whole sum was subscribed between the hours of 
 nine a.m. and one p.m., and another million could 
 easily have been taken on the same day if it had 
 been required. These measures raised the capital 
 of the Bank to £5,058,547 \s. 9<i. 
 
 Several times during its history the Bank has 
 been endangered by violent mobs. One of these 
 times was the j^ear 1709, when Dr. Henry 
 
 D
 
 32 1696-1720 
 
 Saclieverell, a clergyman of the Church of England, 
 who had been a Whig, but became a violent Tory, 
 preached a sermon before the Lord Mayor and 
 Corporation of the City at St. Paul's. In it he 
 attacked certain members of the Government, the 
 Lord Treasurer being designated "Volpone." The 
 vulgar impudence of this sermon excited disgust 
 in many quarters ; the Corporation omitted the 
 customary request that the sermon should be 
 published, and Sir Gilbert Heathcote, one of the 
 directors of the Bank of England, protested against 
 it. But Sacheverell got the sermon printed and 
 himself arrested and impeached. The populace 
 sided with the reverend Doctor, accompanied him 
 to Westminster Hall, and shouted, " God bless the 
 Church and Dr. Sacheverell ! " Some dissenting 
 chapels were attacked, pews and pulpits, hymn- 
 books and Bibles, were made into a great bonfire 
 in Lincoln's Inn Fields. A church, through lacking 
 a steeple, was mistaken for a conventicle and shared 
 the same fate. The Queen, the Ministers, and the 
 respectable part of the community, including the 
 directors of the Bank, became alarmed at the state 
 of afifairs. The directors sent to the Secretary of 
 State requesting a guard to be sent to repel any
 
 THE BANK OF ENGLAND 33 
 
 attack that mio-lit be made on the Bank. The Earl 
 of Sunderland communicated the messaQ:e to the 
 Queen, who immediately sent horse and foot into 
 the City, leaving her own person unprotected. On 
 being remonstrated with she nobly replied, "God 
 will be my guard." Now the tables were turned ; 
 the rioters became alarmed and beat a retreat ; the 
 Bank was saved, and this absurd semi-religious 
 riot was ended. 
 
 In 1710 the Queen intended to change her 
 Ministers. " In June," as recorded by Bishop 
 Burnet, " she dismissed the Earl of Sunderland 
 from being Secretary of State, and presented the 
 Seals to Lord Dartmouth, a Tory. This gave alarm 
 both at home and abroad, l)ut the Queen, to lessen 
 that, said to her subjects here, in particular to the 
 Governor of the Bank of England, that she should 
 make no other changes." Evidently the good opinion 
 of the directors of the Bank was now thought to be 
 of some importance in political circles. 
 
 During this year there appeared to be a prospect 
 of peace with France, and Bank Stock rose from 110 
 to 129; but when it was found that the French king- 
 had resolved to continue the war, it fell to 107. 
 In 1713 several circumstances gave rise to a demand
 
 34 I 696-1720 
 
 for gold, which put some temporary pressure on the 
 Bank's resources. The Queen was seized by a serious 
 illness at Windsor, and there were reports of a 
 threatened invasion by France on behalf of the 
 Pretender. The run on the Bank assumed such 
 alarming dimensions that the directors thought it 
 necessary to send a deputation to the Lord 
 Treasurer, informing him of the danger to j)ublic 
 credit, and measures were promptly taken for its 
 support ; but the aspect of affairs speedily improved 
 when the Queen got better, the reports of a coming 
 invasion proved unfounded, and the Pretender re- 
 mained abroad. 
 
 The health of the Queen was not of long duration ; 
 in 1714 she died. When her end was approaching 
 uncertainty prevailed as to her successor ; some 
 thought she would name the Pretender, others 
 thought it would be the Elector of Brunswick. 
 Plotting and intrigue were going on, and public 
 credit was shaken. The price of Bank Stock fell 
 from 126 to 116, and there was a run on the Bank 
 which lasted for several days. The efforts of the 
 Jacobites were unavailing ; the Elector was hurried 
 over to England, was proclaimed King under the 
 title of George L, and the run on the Bank ceased.
 
 THE BANK OF ENGLAND 35 
 
 In the following year the directors co-operated with 
 the Government in reducina; the interest on the 
 National Debt from six to five per cent., and all 
 the fundholders accepted the proposed terms. In 
 order to effect this arrangement, three bills, called the 
 Bank Act, the South Sea Act, and the General Fund 
 Act, were passed through Parliament. In 1718 
 subscriptions to Government loans were for the first 
 time received at the Bank, and that practice has 
 continued to the present time. 
 
 In the years 1719 and 1720 France was convulsed 
 by the gigantic Mississippi scheme of the notorious 
 Scotchman, John Law. It is unnecessary to enter 
 into the particulars of that scheme in this history, 
 but it is possible that the mania which prevailed 
 in France during those years may have infected the 
 citizens of this country ; it is certain there were 
 many points of similarity between the Mississippi 
 Company and the South Sea Bubble,
 
 CHAPTER IV. 
 
 1720-1745 
 
 Origin of the South Sea Company — Plan to transfer the National 
 Debt to the Company — Opposition of Walpole— Rivalry between 
 the Company and tlie Bank — Wild speculation in South Sea 
 Stock and Bubble Companies — One thousand per cent. — Down- 
 fall of the Company — Punishment of the Chancellor of the 
 Exchequer and the Directors of the Comjiany — The "Best "—A Bun 
 — New building — Bank Post Bills — Renewal of Charter — The 
 Rebellion of 1745 — Flight of Prince Charlie. 
 
 rpHE Bank of England had existed nearly a quarter 
 -^ of a century when it was affected by one of those 
 periods of financial speculation, amounting almost to 
 monetary madness, which have occurred at various 
 times and in different countries. Everybody seemed 
 possessed with the desire of becoming suddenly rich. 
 The most absurd proposals, put forward by designing 
 and unprincipled men to entrap the eager investor, 
 were readily accepted. Stocks and prices rose to an 
 enormous height till at last the bubble burst, and the 
 crash came bringing disaster and ruin to thousands. 
 The Government, the Bank, and the public were all to 
 
 36
 
 THE BANK OF ENGLAND yj 
 
 some extent responsible for this state of aftairs, either 
 by fostering the excitement, or by being (3arried away 
 by it. We will now recall the principal facts of this 
 stirring time. 
 
 The South Sea Company was projected in 1710 by 
 the Prime Minister, Harley, afterwards Earl of 
 Oxford, in order to raise money for the reduction of 
 the interest on the National Debt. 
 
 " But the necessities of the nation increased rapidly, and 
 in the year 1720 a plan was arranged Ijy which the South 
 Sea Company should become the sole national creditor, and 
 should loan to the Government new sums at an interest of 
 four per cent. New monopolies were to be given to the 
 Company ; and it, on the other hand, offered to give a bonus 
 of three million pounds to the Government. The Bank of 
 England, jealous of the proposal, offered five millions for the 
 same advantages. The directors of the Company then l)id 
 seven millions for their charter — nearly enough to pay off 
 the whole redeemable debt of the nation. This, however, 
 could not be accomplished so long as there were, in addition, 
 irredeemable annuities to the amount of eight hundred 
 thousand pounds yearly. 
 
 "To get rid of these became, therefore, now the first 
 object of the Government, and this, it was seen, would be 
 effected if the national creditor could be induced to accept 
 shares in the South Sea Company, instead of his irredeem- 
 able annuities, or as they are now variously called, consols, 
 stocks, or funds. So many monopolies and advantages were 
 
 424116
 
 38 I720-I74S 
 
 granted to the Company, that tlie national creditor at 
 length consented to give up his security for South Sea Stock. 
 The Government, therefore, got rid of the irredeemable 
 annuities and obtained seven millions besides, becoming, of 
 course, debtors to the Company . . . and the national 
 creditor willingly parted with his irredeemable annuities, 
 which paid but five per cent., in order to buy shares which 
 might pay ten per cent. 
 
 "Walpole opposed the scheme with all his might, main- 
 taining that the acceptance of the Company's proposal 
 would countenance stock-jobbing, would divert industry 
 from its customary channels, and would hold out a 
 dangerous lure to the unsuspecting to part with real for 
 imaginary property. He showed the misery and confusion 
 which existed in France from the adoption of similar 
 measures, and proved that the whole success of the scheme 
 must depend on the rise of the Company's stock ; that if 
 there were no rise the Company could not afford the bonus, 
 would fail, and the obligations of the nation would remain 
 as before. But all his reasonings were of no avail. All 
 classes were infatuated. All speculated in South Sea 
 Stock ; and for a while everybody rejoiced, for as long as it 
 continued to rise, all were gainers."^ 
 
 The directors of the Bank on this occasion did 
 not share the caution of the great minister ; but 
 at the same time it may be supposed that if their 
 ofifer of five millions for the business had been 
 
 1 Lord's Modern Europe.
 
 THE BANK OF ENGLAND 39 
 
 accepted they would have conducted it with less 
 discredit and disaster to themselves and to the 
 country than actually resulted from the mismanage- 
 ment of the South Sea Company. But it is 
 impossible to say with certainty what might have 
 been. The excitement of the time was so great 
 that the mere rumour, circulated in 1719, that the 
 Company desired to unite with their own funds 
 the whole of the funds of the Exchequer, the Bank 
 of England, and the East India Company, raised 
 the price of South Sea Stock to 126. 
 
 "Upon the 22nd of January, 1720, the House of 
 Commons resolved itself into a Committee to take the sub- 
 ject into consideration ; and a subsequent proposition, made 
 by the South Sea Company, to unite the wliole of the debts 
 of the State — amounting to £30,981,712 — at 5 per cent, 
 until 1727, and after that period at 4 per cent. — for which 
 they were to pay three millions and a half — met with great 
 approbation from the members of the Government. But 
 the Bank of England had many friends in the House of 
 Commons. The great services rendered by this corporation 
 were brought forward — a strong representation was made 
 of the injustice of thrusting so important a body aside for 
 those who had done nothing to assist the State; and a 
 postponement of the question for five days was obtained. 
 . . . The Bank authorities offered five millions, being an 
 advance of one million and a half on the proposition of the
 
 40 1 7 2o- 1 745 
 
 South Sea Company. No sooner was the offer of the Bank 
 known than the directors of the South Sea Company called 
 a meeting . . . and their offer was increased to upwards 
 of seven and a half millions. But the members of the 
 first monetary establishment in the kingdom were not to 
 be outdone, and offered to give £1700 Bank Stock for every 
 hundred pounds irredeemaljle long annuities. Fortunately 
 for the Bank of England, but unfortunately for the country, 
 the offer of the South Sea Company met with most favour. 
 The former ceased its bidding; the latter remained in 
 possession of its dangerous bargain."^ 
 
 As soon as the result of this strange competition 
 was known, the public madness increased and soon 
 reached a climax. On the part of the Company 
 lying promises and gross exaggerations were circu- 
 lated. Change Alley, in Cornhill, was the resort 
 of brokers and speculators, and for the time 
 the scenes there resembled those of the Rue 
 Quincampoix during the Mississippi fever. In that 
 narrow thoroughfare peers, country gentlemen, 
 clergymen, dissenting ministers, and even ladies 
 jostled one another in their eagerness to make 
 money. After a short time other people much 
 lower in the social scale joined the gambling throng, 
 and invested sums as low as a shilling as deposits 
 
 1 Historij iif flic I la Ilk nf Enijlunil, hy JoHX Francis.
 
 THE BANK OF ENGLAND 41 
 
 on shares of the numerous schemes which were 
 daily being brought out by the touts of the Alley. 
 There were companies formed for all sorts of objects, 
 even the most absurd, such as " the discovery of 
 perpetual motion," for " the f^ittening of hogs," for 
 "the imj)ortation of jackasses" — one would have 
 thought there were plenty of donkeys already. 
 Some of these companies' shares were at a premium 
 of two thousand per cent. One projector had the 
 effrontery to announce a " Company for carrying 
 on an undertaking of great advantage, but nobody 
 to know what it is ; every subscriber who deposits 
 £2 per share to be entitled to £100 per annum." 
 This enterprising individual received subscriptions 
 amounting to the sum of £2000 in five hours. On 
 the following day he was nowhere to be found. 
 
 But to return to the Company — that of the 
 South Sea. In June, 1720, its shares — £100 each 
 — were quoted at £890, and shortly afterwards 
 they rose to £1000. The Company now became 
 jealous of its numerous rivals. 
 
 " In order to stop these absurd speculations " in the 
 companies above mentioned, "and to monopolize all the 
 gambling in the kingdom, the directors of the South Sea 
 Company ol»tained an Act of Parliament empowering them
 
 42 I720-I745 
 
 to prosecute various l)ubble companies that were projected. 
 They did so, and in a few days all luirst. But the South 
 Sea Company made a l)lunder. The moral effect of their 
 proceedings was to open the eyes of the nation to the 
 greatest bubble of all. The credit of their own Company 
 declined. Stocks fell from 1000 per cent, to 200 in a few 
 days. All wanted to sell, nobody to buy. Bankers and 
 merchants failed, and noblemen and country gentlemen 
 became impoverished." ^ 
 
 No less than thirty-seven million pounds were 
 inscribed on the Company's Ijooks, so it is not 
 surprising that great havoc was caused by the 
 bursting of the buljble, and that thousands were 
 reduced to poverty. Efforts were now made to 
 stojD the tide of ruin and to restore public credit. 
 Sir Robert Walpole, who had retired from the 
 ministry, was reinstated in ofHce, and he applied 
 to the directors of the Bank for assistance in the 
 crisis. These gentlemen, for the moment, like so 
 many others at this period, appear to have lost 
 their usual caution. A hasty memorandum of 
 agreement was drawn up, by which they were to 
 undertake the circulation of £3,500,000 in South 
 Sea bonds at 400 per cent. Thus the price of Stock 
 for a time was kept up, books were opened at the 
 
 1 Lord's Modern Europe.
 
 THE BANK OF ENGLAND 43 
 
 Bank, and large sums subscril)e(L Meanwhile the 
 failure of several large companies caused a run on 
 the Bank, so the directors awoke to the dangers 
 of their position and refused to ratify the agree- 
 ment. The South Sea Company then threatened 
 the Bank with legal proceedings, but the conscious- 
 ness of their past malpractices led them to choose 
 the more prudent course of declining to carry their 
 case into the Courts. Eventually a plan of Wal- 
 pole's was adopted which saved the credit of the 
 nation ; but all wdio had purchased Stock when it 
 had risen about 100 per cent, of its original value 
 lost their money. By this plan nine millions of 
 South Sea Stock was engrafted into the Bank of 
 England, another sum of nine millions into the 
 East India Company, and the Government gave 
 up to the public the seven millions the Company 
 had agreed to pay them on obtaining their Charter. 
 The punishment of the directors of the South 
 Sea Company was not effected in a manner which 
 reflects credit on the country. Many members of 
 Parliament were prejudiced for or against the Com- 
 pany. Some had held office under it, others had 
 revengeful feelings on account of the money they 
 had lost by it when the crash came. Nevertheless,
 
 44 1720-1745 
 
 it was this Parliament, far from impartial in the 
 matter, which acted as judge, the result being, 
 according to Gibbon, that " all were condemned, 
 absent and unheard, in arbitrary fines and forfeitures 
 which swept away the greatest part of their sub- 
 stance." The directors and officers of the Company 
 were ordered before the bar of the House of 
 Commons. The treasurer had bolted, so a procla- 
 mation was made that none should be allowed to 
 leave the country. Charges of bribery of members 
 were brought forward, in consequence of which all 
 officers of the Company who held Government 
 appointments were immediately discharged from 
 them. Mr. Aislabie, the Chancellor of the Exche- 
 quer, was deeply implicated, and had shared in the 
 plunder to the extent of £800,000. He was 
 expelled from the House, and was sent to the 
 Tower, to the great satisfaction of the citizens, some 
 of whom illuminated their houses, while the mob 
 made bonfires in various parts of the City. The 
 fines and forfeitures of estates imposed on the 
 directors of the Company and others amounted to 
 upwards of two millions sterling. 
 
 In 1722 the Bank bought £200,000 South Sea 
 annuities at twenty years' purchase, and to provide
 
 THE HOUSE OF SIR JOHN H0UI5L0N, THE FIKST GOVERNOU OF THE BANK.
 
 THE BANK OF ENGLAND 45 
 
 for the ptirment tlieir eapitjil was increased 
 £3,400,000, nearh- the whole of which was sub- 
 scribed for at the rate of 118 per cent. Tliis year 
 is also memorable for the formation of the reserve 
 fund, or ■' Eest," as it is generjilly called. A 
 supposed conspii'acy to send King George I. back 
 to Hanover, and to place the Pretender on the 
 British tliroue, caused a run on the Bank. A camp 
 was formed in Hvde Park, and other means taken 
 to maintain the existing dynasty, the malcontents 
 were kept under, and the run ceased. 
 
 The great Iniilding which now covers hetwoon 
 three and four acres and which occupies the entire 
 area between four streets — namely. Threadneedle 
 and Prince's Streets, Lothlnn-y and Bartholomew 
 Lane — did not spring up all at once, but was a 
 o^rowth of vears. In 1732 the Grocers' Hall, then 
 occupied by the Bank, was found too small for the 
 increasing staff and requirements : so on August 
 3rd in that year the foundation-stone of a new 
 buildino^ was laid on the site of the house and 
 garden in Threadneedle Street of Sir John Iloublon. 
 the first Governor. The new building was ready 
 for occupation in June. 1734. and on the 3t]i K-^i 
 that month the business was removed there. On 
 
 E
 
 46 I720-I745 
 
 January 1st, 1735, the statue of William III.,^ 
 already alluded to, was erected on its pedestal, 
 which bears an inscription in Latin of which the 
 following is a translation : 
 
 For restoring efficacy to the laws, 
 
 Authority to the courts of justice, 
 
 Dignity to the Parliament, 
 
 To all his subjects their religion and liberties, 
 
 AND 
 
 For confirming these to posterity 
 
 By the succession of the illustrious House 
 
 OF Hanover 
 
 To the British throne, 
 
 To THE best of princes, William III., 
 
 Founder of the Bank, 
 
 This Corporation, from a sense of gratitude, 
 
 Has erected this statue. 
 
 And dedicated it to his memory, 
 
 In the year of our Lord, MDCCXXXIY., 
 
 And the first year of this building. 
 
 Towards the middle of the last century highway 
 robberies were very frequent. It was no uncommon 
 thing for a mail coach to l^e stopped by highwaymen 
 and the passengers robbed of their money and 
 valuables. In the year 1738 such robberies were 
 so numerous that the Post Office authorities entered 
 into communication with the Bank on the subject, 
 
 ^ Ajjpendix A.
 
 THE BANK OF ENGLAND 4.7 
 
 and in consequence the directors advertised their 
 intention to issue what are now called Bank Post 
 Bills for the safer remittance of money from one 
 part of the country to another,^ A Bank Post 
 Bill is a promissory note, made by an officer of 
 the Bank of England, undertaking at so many 
 
 THE OLD BANK 
 
 (usually seven) days' sight to pay such " sole bill 
 of exchange " to an assigned person or order. 
 The advantao;e of these bills is that, not beinoj 
 payable on demand like bank-notes, there is an 
 interval during which they may be stopped and 
 the money saved. 
 
 ^ Whitfield's Commercial Sciences.
 
 48 1720-1745 
 
 In 1742 the ten years' term of the Charter 
 ended, and it was then renewed for twenty-two 
 years. The price paid by the Bank for the con- 
 tinuance of its privileges was equivalent to a loan 
 of upwards of a million and a half without interest. 
 The arrangement was made in this way : the 
 interest of the existing debt owing by Government 
 of £1,600,000 was reduced from 6 to 3 per cent., 
 and a further loan of £1,600,000 was granted to 
 the Government at the same, for those days, low 
 rate of 3 per cent. The Act by which the Charter 
 was renewed made the counterfeiting, forging, or 
 altering bank-notes, etc., punishable by death, 
 and it provided also the extreme penalty of capital 
 punishment for such of the " Company's servants " 
 as should be guilty of breaking their trust. This 
 severe law was not found to be of advantage either 
 to the Bank or to the public, and after many 
 persons had suffered death it was repealed. 
 
 On reviewing the past, we find that periods of 
 civil commotion have been times of anxiety to 
 the directors of the Bank. A standing menace 
 to the safety of the British Government and to 
 the Bank was the mimic Court of the descendants 
 of the exiled James XL, which was kept up at
 
 THE BANK OF ENGLAND 49 
 
 St. Germain's under the protection and patronage 
 of the French king. The Jacobite rebellion of 
 1715 was soon suppressed, and it had little or 
 no effect on the interests of the Bank ; but that 
 of 1745 was more serious, and affected the com- 
 mercial and financial concerns of the country to 
 a large extent. The insurrection of 1745 was by 
 no means formidable in itself, but the real danger 
 to the House of Hanover and to the Bank consisted 
 in men's fears concerning it, and in the possibility 
 that the Jacobite lords and the malcontents in 
 England might join it. As it was Funds declined 
 to 49, and the Bank was only successful in avoiding 
 suspension of payment by an artifice. This period 
 in our history was full of events of romantic 
 interest. 
 
 The young Pretender, Charles Edward Louis 
 Philip Casimer Stuart, was now twenty-five years 
 of age, of handsome appearance and engaging 
 manners. He had the power of winning popularity, 
 and while in Scotland he obtained the devoted 
 attachment and fidelity of many of his adherents. 
 As early as 1740, when he was only twenty years 
 of age, he received overtures from the Jacobites 
 of Scotland to come over and head a rebellion.
 
 50 I720-I745 
 
 Five years later, on July 18th, 1745, lie landed 
 on one of the Western Isles with only seven 
 followers. Several Highland chiefs joined him, 
 and with 700 supporters he raised his standard 
 on August 19th. His march through Scotland 
 was a triumphal one, accompanied by rejoicing and 
 festivities. At Holyrood he feasted in the palace 
 of his ancestors. On September 15th he was at 
 Linlithgow^ within sixteen miles of the Scottish 
 capital, which he entered two days later. At 
 Edinburgh he took 1000 stand of arms, and received 
 reinforcements. He soon advanced against the 
 Eoyal troops, under the command of Sir John 
 Cope, at Prestonpans. The Royalists were unpre- 
 pared for the sudden charge of the impetuous 
 Highlanders, and were soon put to flight, and 
 many killed. After this victory the Pretender 
 marched south at the head of an army of 5000 
 men, and crossed the border on November 8 th. 
 The invasion of England was the commencement 
 of his fall. Many of his followers forsook him ; 
 they were willing to support him in regaining 
 the independence of Scotland, but they were 
 unwilling to attempt the conquest of England. 
 The bulk of the capitalists — those who had much
 
 THE BANK OF ENGLAND 51 
 
 to lose — in the northern country held aloof from 
 the revolutionary movement. That was still more 
 the case in England. The Pretender issued a 
 manifesto, in which he stated that " the National 
 Debt was contracted under an unlawful Govern- 
 ment, and was a most heavy load unto the nation, 
 yet his father would take the advice of his 
 Parliament." This did not tend to win over to 
 his cause any of the moneyed class, who remem- 
 bered that Charles Edward was a Stuart, and was 
 descended from Charles L, who seized the money 
 deposited in the Mint, and from Charles II., who 
 appropriated the funds of the Exchequer. The 
 prince was said to have landed with only a guinea 
 in his pocket — a small sum with which to attempt 
 the conquest of a kingdom. Whatever financial 
 assistance he received from his friends after his 
 arrival was insufficient, so he soon found it necessary 
 to levy forced contributions, which he did in 
 Glasgow, Manchester, Derby, and other places. 
 The news of these forced contributions reaching 
 London could only have had the effect of intensi- 
 fying the panic which prevailed there. With 
 diminished forces the young prince marched on 
 to Derby, which he reached on December 4th.
 
 52 I720-174S 
 
 When lie arrived there he heard that the Duke 
 of Cumberland was coming to meet him with an 
 army of 12,000 veterans. His folio w^ers clamoured 
 to return to Scotland, and Charles was forced to 
 yield. His buoyant spirits forsook him, and in 
 grief and despair he followed his retreating troops 
 to Glasgow. From thence he went to the High- 
 lands, where he spent the winter in recruiting his 
 forces and preparing for the final struggle. In 
 the spring he drew up his army on a moor at 
 Culloden, near Inverness, with the intention of 
 attacking the superior forces of the duke, which 
 were nine miles distant. The duke, however, did 
 not wait for his advance, but came up to the 
 rebels on April 15th, 1746, attacked, and utterly 
 routed them. Thus the chances of the house of 
 Stuart regaining the throne w^ere finally extin- 
 guished. Charles Edward, after many adventurous 
 wanderings, succeeded in escaping to France. 
 Although the large sum of £30,000 w^as offered 
 for his head, not one of his faithful followers was 
 tempted to betray him.
 
 CHAPTER V. 
 
 1745-1780 
 
 Black Friday — Run on the Bank — Notes paid in Sixpences — Merchants 
 support the Bank — The Bank supports the Government — Increase 
 of Capital — "Bank Circulation" — Origin of "Consols" — Issue of 
 smaller notes— Vaughan's forgery — Legal decision as to stolen notes 
 — Renewal of Charter —Robbery by a teller — Penal enactments — 
 The Clearing House— Gordon Riots— Enlargement of the Bank. 
 
 WHEN the news reached London that the Pre- 
 tender was at Derby, only 120 miles distant, 
 the citizens were filled with alarm. It was a 
 Friday, and so great was the depression that it has 
 been called " Black Friday."^ The moneyed and 
 trading classes feared their houses and shops might 
 be plundered, or that they would be forced to con- 
 tribute to the expenses of the rebellion, as others had 
 been in the north. Shops were closed, and some 
 citizens left the kingdom ; even the king had his 
 valuables put on board a yacht near the Tower to 
 be ready for flight. All having money in the Bank, 
 as it seemed, wished to draw out, and all possessing 
 notes wished to cash them. The run came so 
 
 1 Not the only Black Friday, see jjost. 
 53
 
 54 1745- 1780 
 
 unexpectedly as to find the directors unprepared 
 to meet it ; they managed, however, to stem the 
 torrent by a stratagem. Persons in the employ of 
 the Bank were given notes to present for payment, 
 and the cashiers paid these notes in sixpences. The 
 paying-out and receiving so much small change was 
 a lengthy process, and thus the Bank gained time, 
 which in the present case was certainly "money." 
 Those who received the cash, after leaving the office, 
 returned by another door and paid the money in 
 again, so the genuine holders of Bank paper found 
 a difficulty in even approaching the counter. By 
 this artifice the Bank was saved from beiijg drained 
 of specie, and the panic soon subsided. Meanwhile 
 the more sober and influential part of the com- 
 munity were taking better steps towards supporting 
 credit than by rushing to the Bank for coin. 
 Merchants and others held a meeting at Garraway's 
 cofi'ee-house, and passed the following resolution : 
 
 "We, the undersigned merchants and others, being 
 sensible how necessary the preservation of public credit 
 is at this time, do hereby declare that we will not refuse to 
 receive bank-notes in payment of any sum of money to be 
 paid to us ; and we will use our utmost endeavours to make 
 our payments in the same manner. 
 
 '' 2Qth September, 1745."
 
 THE BANK OF ENGLAND 55 
 
 That this was a fairly representative meeting 
 is proved by the fact that before four o'clock the 
 same afternoon it was signed by more than eleven 
 hundred traders and fund -holders. 
 
 The cost of suppressing the rebellion and the 
 expenses of the war with France rendered it 
 necessary for the Government to raise another loan. 
 The Ministers endeavoured to obtain what they 
 required by opening a subscription, but as the 
 investing public held back they were unsuccessful, 
 and again had recourse to the Bank of England, 
 by whom one million was advanced at 4 per cent. 
 An Act of Parliament was passed (19 George II. 
 c. 6^) authorizing the Bank to deliver up .£986,000 
 in Exchequer bills to be converted into an annuity. 
 A meeting of the proprietors of Bank Stock was held 
 to accept the proposal. A call on them of 10 per 
 cent, was made, and the capital increased to 
 £10,780,000. 
 
 In 1749 the Act of 22 George II. c. 6 reduced 
 the interest on the 4 per cent, annuities held 
 by the Bank to 3^ per cent, for seven years, 
 from December 25th, 1750, and thereafter to 3 
 per cent.^ The Bank also undertook to advance a 
 
 1 McCulloch's Commercial Dictionary. - Ibid.
 
 56 1745-1780 
 
 sufficient amount to pay off those who did not agree 
 to this arrangement. In order to carry out these 
 alterations the "Bank Circulation" was established. 
 Authorities differ as to the date of its introduction.^ 
 The following description of the Bank Circulation is 
 taken from a little work published by Allen & Co., 
 of Paternoster Row, in 1796. 
 
 "The Bank agreed to advance £1,000,000 into the 
 Exchequer upon the credit of the malt and land duties. . . . 
 At the time the Bank had not a larger sum of money than 
 they deemed necessary to their ordinary and extraordinary 
 demands. . . . They therefore opened a subscription, renew- 
 able annually, for a milUon. Of this sum the subscribers 
 advanced 10 per cent, and entered into a contract to pay 
 the remainder, or any part thereof, at call, under the 
 penalty of forfeiting the 10 per cent, so advanced, in 
 consideration of which the Bank agreed to pay the 
 subscribers 4 per cent, interest on the money paid in, 
 and I per cent, for the whole sum they agreed to furnish. 
 In case a call should be made for the whole or any part 
 of the remainder of the subscription, the Bank further 
 agreed to pay at the rate of 5 per cent, per annum. By 
 this means the Bank obtained the same advantage as if 
 they kept a million by them, and the subscribers received 
 6 1 per cent, on the money they advanced. This was a 
 
 1 Allen's History of the Bank of England says 1746 ; FHA^'CIS' 
 History of the Bank of Emjland, p. 167, says 1750 ; Gilbart's History 
 and Frinciijles of Bankimj says 1751.
 
 THE BANK OF ENGLAND 57 
 
 profitable transaction for the Bank, as the following state- 
 ment shows : 
 
 " The Bank receives from Government for the advance of 
 
 a million . . . . . . . £30,000 
 
 "The Bank paj-s the subscri1)ers who advance £100,000 
 
 and engage to pay (when called for) £900,000 more . 6,500 
 
 " The clear gain to the Bank therefore is . . . £23,500." 
 
 It may interest some persons to know the meaning 
 of the names of some of the Stocks of which the 
 public funds consist. In 1752 the term "Consols" 
 originated by some annuities granted by George I. 
 being consolidated into one fund, together with a 
 3 per cent. Stock formed in the year 1731. In 
 1757 the 4 per cent. Stock (previously mentioned) 
 which was to bear 3^ per cent, interest for seven 
 years from 1750, was further reduced one -half 
 per cent., and was then called the "Three per 
 cent, reduced." The " New three and a half per 
 cent." Stock was formed as late as the year 1830, and 
 the interest of this, as also of other funds, has since 
 been reduced. For many years the lowest amount 
 of a Bank of England note was £20. Afterwards 
 public convenience required notes of smaller amount. 
 In 1759 ten and fifteen pound notes w^ere issued; 
 in 1793 the first five pound note made its appear-
 
 58 1745- 1780 
 
 ance ; in 1797 one and two pound notes were issued, 
 but the issue of these last has ceased, and since then 
 the lowest denomination has lieen five pounds. 
 
 1758 is remarkable as the year in which the first 
 death punishment for forging bank-notes took place. ^ 
 At that time a man of the name of Vaughan carried 
 on the business of a draper at Stafford. He em- 
 ployed several engravers, each of whom was set 
 to copy a portion of a note. When the plates were 
 joined the counterfeit notes were printed and 
 Vaughan filled them up — the notes at that time 
 were signed by hand — and placed twenty of them 
 in the hands of a young lady he was courting, 
 wishino; to show himself off as a rich man. One 
 of the engravers he had employed informed against 
 him, the result being that he was tried for forgery, 
 found guilty, and was hanged on May 1st. 
 
 This history will have to record several actions 
 at law against the Bank. One arose in this year 
 out of the robbery of one of the mails on the 
 northern road. A highwayman stopped the coach, 
 
 ^ Francis (History, etc., p. 170) says this was the first forgery ; 
 Lawson {Histonj of Banking, p. 72) says, " So early as the 15th of 
 August, 1695, the Bank called in their marbled notes, some having 
 been forged."
 
 THE BANK OF ENGLAND 59 
 
 took all the notes contained in the letters, went 
 boldly to the Hatfield Post Office, and got change 
 for one of them. He then engaged a post-chaise 
 with four horses, drove off, and exchanged the 
 remaining notes at different stages. The notes 
 were afterwards stopped at the Bank, and an 
 action was brought to enforce payment. The legal 
 decision was to the effect that any one paying a 
 valuable consideration for a note, payable to bearer, 
 in fair course of business, can recover the money of 
 the Bank. 
 
 In 1764 the Charter was renewed till 1786. For 
 this concession the Bank agreed to give the Govern- 
 ment £110,000 ; accordingly that sum was paid 
 into the Exchequer free of all charge. The same 
 Act of Parliament declared it to be felony, without 
 benefit of clergy, to forge powers of attorney for 
 receiving dividends, transferring or selling Stock," 
 or for personating the proprietors of Stock for the 
 purpose of defrauding them of principal or interest. 
 
 In 1767 an ingenious crime which had been 
 carried on for some time by a bank clerk was 
 discovered. William Guest, a teller, was noticed 
 to have been in the habit of picking out new 
 guineas from old ones ; he was also seen in pos-
 
 6o 1745-1780 
 
 session of an ingot of gold quite unlike the usual 
 ones. This ingot he said came from Holland. 
 Suspicion being created by these circumstances, 
 Guest was watched. On one occasion he was ob- 
 served to take some guineas from a private drawer 
 and mix them with some others on the table, which 
 he paid away to a certain Eichard Still. Still 
 was followed and the money paid to him examined ; 
 three of the coins were found to be of short weight. 
 The money in charge of Guest was then examined, 
 and forty of the guineas were found to be very 
 short in weight, the edges showing that they had 
 been recently filed. His dwelling was searched, 
 instruments for imitating the edges of coins were 
 found, and eleven ounces of gold filings. Guest 
 was put on his trial and found guilty. 
 
 In 1773 an Act was passed making the copying 
 of the watermark of bank-note paper punishable 
 by death ; it was also provided that " no person 
 should prepare any engraved bill or promissory 
 note containing the words ' Bank of England ' 
 or ' Bank post bill,' or expressing any sum in 
 white letters on black ground in resemblance of 
 bank paper, under the penalty of imprisonment for 
 six months."
 
 THE BANK OF ENGLAND 6i 
 
 An institution which has proved to be of great 
 importance to the whole commercial world, as well 
 as a great convenience to bankers, was established 
 in the year 1775. "A building in Lombard Street 
 was set apart for the use of bankers, in which they 
 might exchange drafts and bills, and thereby save 
 time and labour and curtail the amount of floatino- 
 cash requisite to meet the settlement of the different 
 houses if eifected singly. By means of transfer 
 tickets transactions to the amount of millions daily 
 are settled without the intervention of a bank- 
 note."^ These transfer tickets are settled at the 
 Bank of England, where all the "clearing" bankers 
 have current accounts ; but the Bank cashed the 
 drafts held by them in the old-fashioned way of 
 sending clerks to the other banks for the money 
 until as late as the year 1864. 
 
 1780 was an eventful year. On June 2nd the 
 Gordon Riots commenced and lasted nearly a week, 
 during which time terror and confusion prevailed 
 in the Metropolis, and there were great fears that 
 an attack would be made on the Bank. An Act 
 of Parliament had been passed which gave cer- 
 tain indulgences to Roman Catholics. This Act 
 
 ^ Haydn's Dictionary of Dates. 
 P
 
 62 1 745-1780 
 
 gave great offence to a body called the Protestant 
 Association. In tlie month of January previously 
 a petition for its repeal had been presented to the 
 Commons. " No po2:)ery ! " was the cry of the 
 zealots. On June 2nd 40,000 persons, headed by 
 Lord George Gordon, a sincere but fanatical man, 
 assembled in St. George's Fields under the auspices 
 of the above-named association, the object being 
 to present a petition to Parliament for the repeal 
 of the obnoxious Act. Not content with constitu- 
 tional procedure, the mob began to plunder the 
 chapels and houses — first of Roman Catholics, but 
 afterwards those of otlier denominations. The 
 Bank was threatened, but the attack was fortu- 
 nately delayed. The gaols of the King's Bench, 
 the Fleet, Newgate, and Bridewell were forced open 
 and prisoners released. Bishops, peers, and members 
 of the Lower House were attacked and hooted in 
 the streets. On one night the glare of thirty-six 
 fires burning at once made a fearful illumination. 
 After the attack on Newgate the news reached the 
 Bank that the rioters were on their way thither. 
 The Governor was summoned and was soon at his 
 post, and preparations were made for the defence. 
 Old inkstands were cast into l)ullets ; a force was
 
 THE BANK OF ENGLAND 63 
 
 brought into the building, and the military, who 
 had now arrived on the scene, were stationed 
 outside the w^alLs ; the staff of the Bank were 
 called on to assist, and some were stationed on 
 the roof to fire on the assailants if they should 
 succeed in forcing an entrance. A Volunteer corps 
 of citizens assisted the soldiers. These measures 
 overawed the rioters, and their attack was conse- 
 quently feeble ; the first fire of the military repulsed 
 them, and after a second unsuccessful attempt they 
 gave up the attack. On June 8th the Horse and 
 Foot Guards, the Militia of several counties who 
 had marched to London, and the Volunteers finally 
 subdued the riots. The rioters lost 210 killed and 
 248 wounded ; seventy-five of the latter afterwards 
 died in hospital. Many were tried, convicted, and 
 executed. Lord Georoe was tried for high treason 
 and acquitted on February 2nd, 1781. He was 
 afterwards convicted for libel, and died in prison 
 November 1st, 1793. 
 
 Had the rioters made their attack on the Bank 
 earlier, it has been thought that they would probaljly 
 have succeeded. It may seem strange that so 
 important an institution as the Bank of England 
 should have been left so long inadequately protected.
 
 64 
 
 1745-1780 
 
 The reason is that the Bank is a corporation of 
 private persons, not a branch of the Government 
 service. Nevertheless, as they were bankers to the 
 Government, and had the management of the 
 currency as well as the National Debt, it was deemed 
 necessary that means should be provided against the 
 
 IHE liANk Of ENGLAND (OLD BriLDINO), 
 
 Threadneedk Street front. 
 
 attack of an enemy, so ever since the Gordon Riots a 
 company of Foot Guards — generally Grenadier or 
 Coldstream — is marched into the Bank every 
 evening, and remains there till six or seven the 
 following morning. The officer is provided with 
 a dinner, to which he is at liberty to invite two
 
 THE BANK OF ENGLAND 65 
 
 friends. Another consequence of. the "no popery" 
 riots was the enlargement of the building in Thread- 
 needle Street. In the course of a lecture recently 
 delivered in the London Institution, Canon Benham 
 said : 
 
 " Oil part of the ground where the Bank stands was the 
 church of St. Christopher-le-Stocks, built in the thirteenth 
 century. But in 1780, during the Gordon Eiots, the Bank 
 authorities considered . that the tower would ])e a good 
 position for the mob to storm the Bank from, and procured 
 its removal, and the site was thrown into the Bank." 
 
 The church was taken down in 1781.^ 
 
 Prior to the riots (as w^e read in Old and New 
 
 London) the Bank was a small and modest building, 
 
 surrounded by houses and the church above named ; 
 
 on the east side, in Bartholomew's Lane, were about 
 
 fifteen or tw^enty private buildings. 
 
 1 A Bibliographii of flw BuuJ; of Eivjland, l>y T. A. Stephens.
 
 CHAPTER YL 
 
 1780-1796 
 
 Old Patch's frauds— Forged notes — Altered tellers' tickets— Suicide of 
 Patcli — George Morland under su.si:)icion — Renewal of Charter— 
 Fenton's frauds — Unclaimed dividends— Panic— London Missionary 
 Society — Bank versus Government — A " Solemn Resolution " — 
 Limited discounts. 
 
 ABOUT the time of the disturbances related in the 
 -^-^ previous chapter, a more crafty attack on the 
 funds of the Bank was made by a criminal, who for 
 years defied detection. Charles Price, the person 
 alluded to, at the ao-e of seventeen began his fraudu- 
 lent career, in which he played various parts, as 
 comedian, bre^ver, lottery-office keeper, stockbroker, 
 gambler and forger, in all or most of which emploj- 
 ments swindling was the prevailing element. At last 
 he came to reo;ard the Bank of Eno-land as his mine 
 of wealth, which he worked most cunningly and 
 secretly, his mistress being his confidante. His plan 
 was to forge and circulate counterfeit Bank of 
 England notes. Ho made his own ink and paper, 
 
 66
 
 THE BANK OF ENGLAND 67 
 
 and practised copying the cashiers' signatures until 
 he could imitate them perfectly. The first of Price's 
 notes which was presented for payment was paid 
 immediately, so genuine did it appear to be, and it 
 was not till it had passed ' to another department 
 that it was found to be a forgery. Afterwards 
 similar counterfeit notes were constantly coming 
 in, especially during the time of lottery - drawing. 
 The directors took all the means they could avail 
 themselves of in order to discover the thief. 
 Detectives were employed, and large rewards were 
 offered by advertisements in the papers ; but, not- 
 withstanding, for a long time these fraudulent notes 
 could never be traced beyond the lottery offices, 
 and the clever rascal who was preying on society 
 continued to escape detection. His mode of pro- 
 cedure was as clever as it was original. In 1780 
 Price, who adopted the name of Mr. Brank, 
 but who was better known by the nickname of 
 " Old Patch," advertised for a man-servant. A 
 young man who had answered the advertisement 
 was called upon liy a coachman, who asked him 
 to step into a coach in which the advertiser was 
 waiting. When the young man entered the convey- 
 ance he saw a person who appeared to be "a
 
 68 1 780- 1 796 
 
 foreigner, sixty or seventy years old, apparently 
 troubled with gout, as some yards of flannel were 
 wrapped around his legs. A camblet surtout was 
 buttoned round his mouth ; a large patch placed 
 over his left eye ; and nearly every part of his 
 face was concealed." This pitiable object was 
 Charles Price, alias Mr. Brank, who after two or 
 three interviews with the young man finally engaged 
 him. Having informed him that his principal duty 
 would be the purchase of lottery tickets for his 
 " whimsical ward," Price gave his new servant a 
 £20 and a £40 bank-note, both of his own manu- 
 facture, for that pur^Dose. He afterw^ards gave him 
 various sums, at one time as much as £400, in 
 similar notes, and Price always waited in his carriage 
 near the lottery offices to receive the tickets. After 
 this had l^een going on some time a partial clue 
 was obtained, and the young servant arrested. His 
 protestations of innocence were disregarded, and 
 he was confined in prison. When, however, the 
 directors found the forged notes continued to pour 
 in, they discovered they had got the wrong man, 
 and had him discharged from custody with a present 
 of £20. These forged notes had been circulated 
 five or six years when Price invented a new method
 
 CJl,\'. 9'^nifE in his iisiia/T^ryf^: 
 
 rjJA 'TliirE m ■J.)i.yi/f.'/.'ic. 
 
 r/^ //eif/-</>rf/ ill tAf J)i/'/ir J^r/ifry. i-/f/r /hyr /? <•/ //ir/r Diirinei/v. 
 
 C^J9
 
 THE BANK OF ENGLAND 69 
 
 of defrauding tlie Bank. On December 17th, 1785, 
 lie paid in ten pounds, for which he received a 
 "teller's ticket" for that amount, which he shouhl 
 in the ordinary course have given to a cashier in 
 e'xchano-e for a £10 note. Instead of doino; this, 
 he took the ticket home and cleverly altered the 
 amount to £100, returned to the Bank, and received 
 that sum. When the clerks attem|)ted to agree 
 at the close of the day they found the cash short. 
 On carefully examining the tickets issued, they 
 found two others had l)een altered, which made 
 the deficiency nearly £1000. Price's career was 
 now nearly closed ; one of the notes was at last 
 traced to him. When he found the game was up, 
 by arrangement with his mistress, he procured 
 the destruction of his incriminating implements, 
 obtained a rope through the agency of his son, 
 and hanged himself. A coroner's jury gave a 
 verdict of felo de se, and according to the old 
 custom the body was buried at midnight in a 
 lonely cross-road grave. 
 
 Another incident connected with the "Patch" 
 crimes is worthy of being recorded. George 
 Morland, a well-known artist, was at that time 
 in pecuniary difficulties, and in order to avoid
 
 70 1 780- 1 796 
 
 imprisonment for debt, was living in an obscure 
 lodging in the then quiet suburb of Hackney. His 
 anxious looks and retiring manners induced some 
 of liis neighbours to suspect liim to be a maker 
 of forged notes. These suspicions being communi- 
 cated to the authorities of the Bank, the directors 
 sent to have the suspected forger watched and, 
 perhaps, arrested. The painter himself, however, 
 was on the watch, and mistaking the emissaries 
 of the Bank for bailiffs, he escaped by the back 
 of the house as they approached the front, fled 
 through Hoxton, and never halted till he had 
 hidden himself in London. On the supposed 
 bailiffs entering the house Mrs. Morland told them 
 who her husband was, and showed them his 
 unfinished pictures. The end of this episode was 
 that the directors presented Mr. Morland with a 
 couple of twenty-pound bank-notes to compensate 
 him for the alarm they had given him.^ 
 
 The directors did not wait till close upon the 
 expiration of their Charter, which had five more 
 years to run, before they applied for its renewal. 
 In 1781, when the Government was in need of 
 money, they thought the time favourable to the 
 
 ' Lices of the Paiiitt'rs, by Allan Cunningham.
 
 THE BANK OF EN-GLAND 71 
 
 interests of the Bank. Accordingly they proposed 
 and obtained more advantageous terms than might 
 have been entertained at a subsequent period. They 
 offered in exchange for an extension of the Charter 
 for twenty-five years to grant a loan of three millions 
 for three years at 3 per cent, interest. There was 
 great opposition to this jDroposal ; the expenses of 
 the war, however, made the offer of help very 
 acceptable to the Government. Lord North spoke 
 strongly in favour of the bill, and proposed to 
 pay off two millions of the navy debt with the 
 money now offered him. The bill was passed and 
 the Charter prolonged "till twelve months' notice 
 after August 1st, 1812." 
 
 In 1789 Francis Fenton, a clerk in the Bank, 
 was executed for forgery. His crime was somewhat 
 uncommon in its method : having been requested 
 by a friend to purchase £50 Stock, Fenton gave 
 him a forged receipt and at the same time obtained 
 his signature to a transfer for £450, having led 
 him to believe that it was an acceptance of the 
 £50 Stock he had purchased. 
 
 A great many people, from various causes, fail 
 to draw the dividends due to them on the Stock 
 they hold. The unclaimed dividends had been
 
 72 
 
 1780-1796 
 
 I 
 
 increasing in number year by year until in 1789 
 tliey amounted to over half a million sterling, as 
 the following statement shows : 
 
 The balance to the credit of the unclaimed 
 dividend account amounted, in round numbers — 
 
 111 1727 
 
 . to £43,000 
 
 „ 1752 
 
 ,. £60,000 
 
 „ 1774 
 
 „ £292,000 
 
 „ 1776 
 
 „ £314,000 
 
 „ 1789 
 
 „ £547,000 
 
 The history of this subject illustrates the extent 
 to which people's sense of justice is often perverted 
 by their pecuniary interests. It would probably 
 be considered by unprejudiced persons that the 
 rights of property in this fund should revert to 
 the public in the event of the owners making 
 no claim to it. The whole debt is a national one, 
 and the interest on it is paid by taxes levied on 
 the people ; it is, therefore, natural to conclude 
 that the nation should have the benefit of any 
 accumulated funds derived from that source, rather 
 than the corporation which acts as bankers to the 
 nation. But not so thought the directors and pro- 
 prietors of the Bank at that time. So tenacious 
 were the directors of what tliev considered their
 
 THE BANK OF ENGLAND 73 
 
 rights in this matter that the clerks were afraid 
 to inform any stockholders of arrears of dividends 
 to which they were entitled lest they should be 
 dismissed from their situations/ On December 
 15th, 1790, Mr. Pitt proposed to appropriate for 
 the Government the whole of the £547,000, except 
 £50,000 to be left with the Bank of England as 
 a Hoating Ijalance. This proposal caused great 
 indignation among the proprietors of Bank 
 Stock, and meetings were held to protest against 
 it. When in the following year the measure 
 was introduced into the House of Commons, the 
 opposition to it was more strenuous ; even such 
 great men as Fox and Burke denounced it. The 
 bill, however, had passed the third reading when 
 the controversy ended for a time in a compromise. 
 The Governor proposed to lend the Government 
 £500,000 without interest until the unclaimed 
 dividends should amount to less than £600,000, 
 on the condition that the claim put forward should 
 be abandoned. Mr. Pitt decided to accept this 
 offer. He also induced the directors to publish 
 a list of the dividends unclaimed, which he said 
 " belonged to the pul)lic, on whose behalf and as 
 
 1 Lawson's History uf Banhiny.
 
 74 1 780-1796 
 
 whose agents the Bank of England paid them, and 
 not to the proprietors of that corporation." 
 
 We are now approaching a period of commercial 
 depression and panic, leading eventually to a suspen- 
 sion of cash payments which lasted for many years. 
 The termination of the war with America in 1783 
 had the effect of diverting men and money from 
 destructive and wasteful war abroad to peaceful 
 and productive pursuits at home, with the result 
 that our population and trade increased and our 
 manufactures extended. New factories were erected, 
 the country banks extended their circulation, and 
 manufacturers based their arrano-ements on the 
 anticipation of the continuance of peace and cheap 
 money. This state of prosperity and hopefulness 
 suddenly ceased when, at the close of 1792, there 
 was a prospect of another war with France, and 
 panic seized on the trading community when war 
 actually broke out in 1793. There were numerous 
 failures of merchants and country bankers, and, 
 as usual at such times, a drain of gold from the 
 coffers of the Bank of England. The timely inter- 
 vention of the Prime Minister prevented a catas- 
 trophe. Mr. Pitt made a proposal in Parliament — 
 an advance on Exchequer bills. A committee which
 
 THE BANK OF ENGLAND 75 
 
 was appointed to consider and report on the matter 
 recommended that five millions should be so 
 advanced. The effect was immediate, and confi- 
 dence was restored. £2,202,200 only were applied 
 for by two hundred and thirty -eight applicants ; the 
 whole of this sum was repaid. In March the drain 
 of gold from the Bank ceased. In this year five-pound 
 notes were issued by the Bank for the first time. 
 The year 1795 was the centenary of the opening 
 of the Bank to the public. It was also the birth 
 year of the London Missionary Society, who sent 
 out such men as Morrison, Mofi'at, and Livingstone 
 to carry the light of Christianity into the darkness 
 of heathendom. One of the stafi" of the Bank was 
 the first Home Secretary of this Society; he occupied 
 that post for three years. In the " Story of the 
 L.M. S." the Eev. C. Silvester Home says, "On 
 Monday, September 28th, the Rev. John Love was 
 elected Foreign Secretary, and William Shrubsole,Escp, 
 of the Bank of England, was chosen as co-Secretary 
 'chiefly with a view to the home correspondence.'" 
 The vast sums of money paid by Pitt to provide 
 for the expenses of the war and the subsidies paid 
 to foreign states placed a great strain on the 
 resources of the Bank, for the directors were aoain
 
 76 1 780- 1 796 
 
 and again applied to for advances of parliamentary 
 grants. Whenever the Government were in pecu- 
 niary straits the Bank came to the rescue. The 
 directors foresaw that disaster must follow if this 
 state of things were indefinitely prolonged. In 
 January, 1795, a long correspondence commenced 
 between the Bank and Pitt, in reference to the 
 advances made by the former to Government, to 
 which, unfortunately for the credit of the country, 
 the Government gave no practical heed. On the 
 15th of that month a Court of Directors of the 
 Bank of England was held, at which a resolution 
 was passed " That the Chancellor of the Exchequer 
 be requested to make such arrangements in his 
 finances of the present year as not to depend on 
 any further assistance from them beyond what 
 had been already agreed on." On the 16th April 
 the Governor and Deputy Governor called on Mr. 
 Pitt to express to him the uneasiness they and their 
 fellow directors felt at being called upon to pay 
 upwards of two millions in Treasury bills, and 
 requested he would be good enough to provide for 
 their discharge. Ao-ain, on the 8th October, a 
 written communication was sent by the directors 
 to the Chancellor of the Exchequer informing him
 
 THE BANK OF ENGLAND jj 
 
 that a large and continued drain of bullion and 
 specie had arisen " from loans and other subsidies," 
 and expressing the necessity that existed for dimin- 
 ishing the sum of their present advances to the 
 Government. To this Mr. Pitt made no reply, 
 neither did he take any action in the matter. 
 
 Several similar communications were afterwards 
 made by the Bank which were equally ineffective. 
 On the 20th July, 1796, Mr. Pitt applied to the 
 Court of Directors for more advances, including 
 the payment of Treasury bills. Inconsistent as it 
 may seem with their previous protestations, the 
 directors complied with the Minister's demands 
 and granted the loans ; but to justify themselves 
 they sent a coj^y of the following " most serious 
 AND SOLEMN RESOLUTION," which they desired to be 
 laid before His Majesty's Cabinet : 
 
 "They beg leave to declare that nothing could induce 
 them, under present circumstances, to comply with the 
 demand now made upon them, but the dread that their 
 refusal might be productive of a greater evil; and nothing 
 but the extreme pressure and exigency of the case can, in 
 any shape, justify them for acceding to this measure ; and 
 they apprehend in so doing they render themselves totally 
 incapable of granting any further assistance to Government 
 during the remainder of this year, and unable to make the
 
 78 1 780-1 796 
 
 usual advances on the land and malt taxes for the ensuing 
 year, should those bills be passed before Christmas. They 
 likewise consent to this measure in a firm reliance that the 
 repeated promises so frequently made to them, that the 
 advances on the Treasury bills should be completely done 
 away, may be actually fulfilled at the next meeting of 
 Parliament, and the necessary arrangements taken to 
 prevent the same from ever happening again, as they 
 conceive it to be an unconstitutional mode of raising 
 money; what they are not warranted by their charter to 
 consent to ; and an advance always extremely inconvenient 
 to themselves." 
 
 Neither their letters to the Chancellor of the 
 Exchequer and deputations sent to Downing Street, 
 nor their "solemn resolutions," could alter the fact 
 that the directors of the Bank had advanced such 
 large sums to the Government as to leave themselves 
 in possession of insufficient coin to meet the require- 
 ments of the public. The continued drain of gold 
 led the directors in the month of December to limit 
 their discounts.
 
 CHAPTER VII. 
 
 1796-1808 
 
 The Loyalty Loan — Smalliiess in amount of specie — Run on country 
 bankers — Crisis— Order in Council — Notification of suspension of 
 payment— Meeting and support of citizens — Depreciation of bank- 
 notes and funds — Effect of Pitt's policy — Inconvenience tlirougli 
 want of casli — Issue of Spanish dollars — Discussion in the House 
 — Report of Committee — Government's responsibility for the 
 suspension — Evidence of the Governor — Suspension continued till 
 the conclusion of the war — Proposed new bank — Committee of 
 Secrecy — Voluntary contributions for the war — Renewal of Charter 
 — Astlett's frauds — Erskine's defence — Abraham Newland — 
 Finance Committee and reduction of profits — Notes as "candle- 
 sticks" — A gang of foi'gei'S. 
 
 NOTWITHSTANDING the difficulties of the 
 -^^ Bank, the fact that the wealth of the country 
 and confidence in the established Government had 
 greatly increased was manifested by the eagerness 
 and rapidity with which Mr. Pitt's new loan was 
 taken up by the public in the following year. We 
 will take the account as given by Mr. Francis and 
 Mr. Weir: "The correspondence of Lord Malmes- 
 bury has proved that Mr. Pitt was always 
 
 79
 
 8o 1 796- 1 808 
 
 willing to enter into a negotiation for peace. 
 The French Directory, however, fancying that 
 the riches of England were evaporated, were 
 reluctant to come to terms. The belief soon 
 spread throughout the country that this arose 
 from the opinion that the resources of England 
 were nearly exhausted, and Mr. Pitt determined 
 to avail himself of this feeling by demanding a 
 loan of £18,000,000. The following were the terms 
 proposed : ' Every person subscribing £100 to 
 receive £112 in Five per Cent. Stock, to be 
 irredeemable, unless with the consent of the owner, 
 until the expiration of three years after the present 
 Five per Cents, shall have been redeemed, but with 
 the option of the holder to be paid at par at 
 any shorter period — not less than two years from 
 the conclusion of the definite treaty of peace.' On 
 the first day of December the subscription opened. 
 The Bank subscribed one million, and each of the 
 directors £400,000. The first day saw five millions 
 subscribed, and on the second the subscription 
 reached nearly twelve millions. The anxiety con- 
 tinued on the third ; and on the following Monday 
 the names received from the country were added 
 before the opening of the doors, when, so great
 
 WILLIAM BANNING, GATEKEEPER.
 
 THE BANK OF ENGLAND 
 
 was the crowd, that numbers could not get near 
 the books, but called out to .their more fortunate 
 brethren to enter their names. In an hour and 
 twenty minutes the subscription was filled. So 
 great and so general was the desire to subscribe 
 that the room was a scene of the utmost confusion. 
 Persons continued to come long afterwards, and a 
 vast number of orders were sent by j)OSt which 
 were too late to be executed. It is a curious fact 
 that the subscription for this enormous sum was 
 completed in fifteen hours and twenty minutes. The 
 loan, from the stimulus of national excitement under 
 which it was raised, was called the Loyalty Loan." 
 
 The strained relations between the Government 
 and the Bank, however, continued during the whole 
 of that year ; difficulties increased, and the public 
 became alarmed, and speculations and rumours as 
 to the smallness of the amount of bullion and specie 
 in the Bank were circulated. One of the pamphlets 
 which issued from the press stated that the amount 
 was "most probably not more than one million." 
 This conjecture may not have been correct at the 
 time it was made, ])ut it became true towards the 
 end of the crisis, as was afterwards admitted by 
 the Governor of the Bank.
 
 82 . 1 796-1808 
 
 The crisis was now acute, and the end was fast 
 approaching. Towards the close of 1796 appre- 
 hensions of an invasion from France caused a run 
 on some of the country banks, and consequently 
 the demands on the National Bank for gold 
 increased/ On Saturday, February 24th, the 
 directors of the Bank and the members of the 
 Government were greatly alarmed at the low state 
 of the bullion, which had been diminishing all that 
 week. On the following day, Sunday 25th, a 
 Cabinet Council was held at Whitehall at which 
 the king was present, and the following resolution 
 was passed : 
 
 " Upon the representation of the Chancellor of the 
 Exchequer, stating that, from the result of the information 
 he has received and of inquiries which it has been his duty 
 to make respecting the effect of the unusual demand for 
 specie that has been made upon the Metropolis in conse- 
 quence of ill-founded alarms in different parts of the 
 country, it appears that unless some measure is immediately 
 taken there may be reason to apprehend a want of a 
 sufficient supply of cash to answer the exigencies of the 
 
 1 On February 9th, 1797, the Court of Directors instructed the 
 Governor to inform Mr. Pitt that i;nder the present state of the 
 Bank's advances to Government, to agree to his request of making 
 a further advance of £1,500,000 as a loan to Ireland would threaten 
 ruin to the Bank, and most probahly bring the directors under the 
 necessity of shutting up their doors.
 
 THE BANK OF ENGLAND 83 
 
 public service. It is the unanimous opinion of the Board 
 that it is indispensably necessary for the public service that 
 the directors of the Bank should forbear issuing any cash in 
 payment until the sense of Parliament can be taken on the 
 suliject, and the proper measures adopted thereupon for 
 maintaining the means of circulation and supporting the 
 public and commercial credit of the kingdom at this 
 important juncture. And it is ordered that a copy of this 
 minute be transmitted to the directors of the Bank, and 
 they are hereby required, on the ground of the exigency of 
 the case, to conform themselves thereto until tlie sense of 
 Parliament can be taken as aforesaid. 
 
 " (Signed) W. Fawkener." 
 
 After that meeting the members of the Govern- 
 ment met the Governor and Dejjuty Governor of the 
 Bank at Downing Street and gave them the order 
 to suspend cash payments. 
 
 On the next day, Monday, 27th, great excitement 
 prevailed in the City when it was known that the 
 following notice was posted in the hall of the 
 Bank : 
 
 " In consequence of an order of His Majesty's Privy 
 Council, notified to the Bank last night, a copy of which 
 is hereunto annexed, the Governor, Deputy Governor, and 
 Directors of the Bank of England think it is their duty 
 to inform the proprietors of the liauk Stock, as well as the 
 public at large, that the general concerns of the Bank are in
 
 796-1 { 
 
 the most affluent and flourishing situation, and such as to 
 preckide every doubt as to the security of its notes. The 
 Directors mean to continue their usual discounts for the 
 accommodation of the commercial interests, paying the 
 amount in bank-notes ; and the dividend warrants will 
 be paid in the same manner." 
 
 Considerable alarm was the result of the appear- 
 ance of this notice ; but the merchants and bankers 
 of the City took the best steps they could take 
 to face the situation. They held a meeting the 
 same afternoon at the Mansion House and passed 
 a resolution in the same terms as the one passed 
 in 1745, in which they expressed their resolve not 
 to refuse to receive bank-notes in payment of any 
 sums of money due to them, and their intention 
 to make all payments as far as possible in the same 
 manner. This w-as signed, by four thousand of the 
 best names in the City. This policy w'as successful 
 and, as Mr. Lawson says, the credit of the Bank 
 immediately revived, and bank-notes were circulated 
 more freely than ever and retained the same degree 
 of credit as they had when they were paid in specie. 
 But we find the notes had depreciated 14 per cent, 
 in the month of June. They shared the same 
 depreciations, how^ever, with funded property, but
 
 THE BANK OF ENGLAND 85 
 
 not to SO oTeat an extent. Previous to 1797 Consols 
 had been up to 974- ^^^^ Bank Stock to 219. About 
 a month after cash payments ceased, Consols were 
 down to 47:f, and Bank Stock to 121 J, a decline 
 of about 50 and 98 respectively. 
 
 The object of the present writer is briefly to 
 state facts and to make this little work a history 
 and not a criticism ; but it is not out of place to 
 record the fact that the justice and wisdom of the 
 suspension of cash payments has been questioned, 
 and both the Government and the Bank have been 
 censured. If success can prove justification the 
 Government w^as rio;ht in the matter, for Pitt's 
 policy gave England such command of the "sinews 
 of war" as enabled her to conquer Napoleon 
 Buonaparte, the mighty commander who had laid 
 nearly the whole of Europe at his feet. 
 
 Considerable inconvenience was caused to the 
 public by the shortness in the supply of cash, and 
 efforts were made to meet the difficulty. By an 
 Act, passed March 3rd, notes under £5 were 
 authorized, and on the 10th of that month £1 
 and £2 notes were issued. The London bankers 
 found a difficulty in paying the fractional parts of 
 the cheques drawn on them, and tbey applied to the
 
 86 1796-1808 
 
 Bank for more coin. The reply they received was 
 to the effect that the Bank could not spare the 
 specie, but that the cashiers were employed day 
 and night, by rotation, in preparing one and two 
 pound notes. Some bankers then applied to Mr. 
 Pitt requesting his assistance in procuring sufficient 
 cash to meet the demands of their customers. Here 
 they were more successful, but were told they could 
 not have " more than 1000 guineas each." In 
 order to increase the supply of coin for small 
 payments a large quantity of Spanish dollars were 
 afterwards issued at 5s. 6d. each. To make 
 them current the sanction of the Government was 
 obtained, and a small head of George III. was 
 stamped on the neck of Ferdinand of Spain. This 
 issue inspired a wag to write the couplet : 
 
 " The Bank, to make their Spanish dollars current pass, 
 Stamped the head of a fool on the head of an ass." 
 
 We now return to the events of the famous 
 Monday, February 27th. On that day Mr. Pitt 
 conveyed to the House of Commons a message 
 from the King in reference to what had happened, 
 and stating that " His Majesty relied with the 
 utmost confidence on the experienced wisdom of
 
 THE BANK OF ENGLAND 87 
 
 his Parliament for taking such measures as might 
 be best calculated to meet any temporary pressure." 
 Mr. Pitt then moved for a Select Committee for 
 examining the affairs of the Bank. In reply Mr. 
 Fox condemned the Order in Council in strong terms 
 and said, " The value and use of the Bank consisted 
 in this, that its notes were convertible at pleasure 
 into gold and silver. Of all the modes of settling 
 this affair the plan which the Minister had adopted 
 was the most dangerous : it would never be out 
 of memory of the people." The Committee asked 
 for was appointed, and it presented its report on 
 March 3rd, 1797. That report stated that the total 
 amount of outstanding demands on the Bank was 
 £13,770,390 and the funds for discharging those 
 demands amounted to £17,597,280, which left a 
 surplus of effects belonging to the Bank of 
 £3,826,890; that statement was exclusive of the 
 permanent debt of £11,686,800 due from the 
 Government to the Bank. 
 
 The above assets of seventeen millions odd 
 include "Treasury l)ills paid for Government," 
 " Loan," and " Interest," which together amounted 
 to nearly two millions and a half. 
 
 The report that there was to be a loan for Ireland,
 
 88 • I 796-1808 
 
 a great part of which was to be in specie, alarmed 
 the directors, and on the 10th February, 1797, a 
 Court was held at which it was resolved to ask for a 
 repayment of part of the advances to the Govern- 
 ment, and a statement of the following claims was 
 immediately presented to Mr. Pitt. 
 
 Arrears of advance on Land and Malt Tax — 
 
 1794 .... £337,000 
 
 1795 .... £491,000 
 
 1796 .... £2,392,000 
 Exchequer bills on vote of credit . £968,000 
 
 Ditto on Consolidated Fund, 1796 . £1,323,000 
 Treasury bills paid . . £1,674,645 
 
 £7,185,645 
 Arrears of Interest . . £'400,000 
 
 £7,585,645 
 
 It is therefore probable, to say the least, that had 
 Mr. Pitt attended to the first application of the Bank 
 and made arrangements for satisfying their claims, 
 the extreme measure of suspension of payment 
 might have been avoided. The following extract 
 from the evidence given by the Governor of the 
 Bank before the Committee of the House of Lords 
 on March 24th, 1797, supports this view. 
 
 " Q. If, in consequence of the various remonstrances that 
 have been made to the Chancellor of the Exchequer, the 
 
 I
 
 THE BANK OF ENGLAND 89 
 
 advances by the Bank to Government had been either paid 
 off or greatly diminished, do you not conceive it would have 
 enabled the Bank to regulate, at their discretion, the amount 
 of the bank-notes in circulation ? — A. Undoubtedly. 
 
 Q. If the advances had been either paid off or greatly 
 diminished at the periods you applied for such payments, do 
 you think the necessity of the Order in Council for suspend- 
 ing the payments in cash on the 26th February would have 
 existed ? — A. Had the advances to Government been con- 
 siderably less, I do not think the Order in Council would 
 have been necessary." 
 
 On the 3rd May an Act was passed which con- 
 firmed the Order in Council for the suspension of 
 cash payments ; it was known as Peel's " Restriction 
 Act." It was only a temporary measure, but the 
 time of its enforcement was afterwards prolonged, 
 and finally an Act was passed by which the Order 
 remained in force until " six months after the 
 conclusion of the war." 
 
 In the same month the exclusive privileges of the 
 Bank were threatened. On the 30tli May Sir 
 William Pulteney, in the House of Commons, asked 
 leave to bring in a bill for the creation of a new 
 bank "in case the Bank of England did not pay in 
 specie on June 24th, 1797." He said he considered 
 " that tlie monopoly of the Bank was no better than 
 a premium for indolence and neglect." Mr, Pitt
 
 go 1 796- 1 808 
 
 opposed the measure ; he said successful progress had 
 been made towards the resumption of payments in 
 specie, but he could not say when that ought to take 
 place. The bill was rejected. 
 
 The suspension of cash payments was continued 
 for political reasons, and not because the Bank was 
 unable to pay its notes in cash. A Court of the 
 Directors of the Bank was held on October 26th, 
 at which it was resolved that " the Governor and 
 Company of the Bank of England are enabled to 
 issue specie in any manner that may be deemed 
 necessary for the accommodation of the public." 
 After alluding to "political circumstances," the 
 resolution concludes by stating that the directors 
 "wish to sulmiit to the wisdom of Parliament 
 whether, as it has been once judged proper to lay 
 a restriction on the payments of the Bank in cash, 
 it may or may not be prudent to continue the same." 
 A Committee of Secrecy was appointed by the 
 House of Commons to inquire into the matter. On 
 November 11th the Bank submitted a statement 
 which showed their claims to be seventeen millions 
 and the funds at their command twenty-one millions, 
 exclusive of the permanent Government debt to them 
 of eleven millions. Notwithstanding this satisfactory
 
 THE BANK OF ENGLAND 91 
 
 condition, the Committee reported in favour of the 
 continuation of the restriction. 
 
 In the year 1798 an Act of Parliament was passed 
 to legalize voluntary contributions for the purpose of 
 carrying on the war. The Bank headed the list 
 with a contribution of £200,000. Hustings were 
 erected at the east of the Royal Exchange, and the 
 area was crowded with persons who subscribed sums 
 of a guinea and upwards. The subscriptions 
 amounted to two millions, and in addition £300,000 
 was remitted from India. 
 
 The new century commenced with the renewal of 
 the Bank Charter. On January 9th, 1800, the 
 general meeting of the proprietors of Bank Stock 
 resolved that an ofter be made to the Government 
 to advance three millions without interest on the 
 security of Exchequer bills. Parliament accepted 
 the offer, and in consideration thereof prolonged the 
 Charter for an additional period of twenty years, that 
 is, from August 1st, 1813 (the previously arranged 
 date of its expiration), to August 1st, 1833, with 
 one year's notice from that day. 
 
 In July, 1803, Robert Astlett, a nephew of 
 Abraham Newland, the chief cashier, a clerk in 
 the Bank, was tried at the Old Bailey for defrauding
 
 92 1 796-1808 
 
 his employers of the enormous sum of £320,000 
 in Exchequer bills. The prosecution failed in con- 
 sequence of the remarkable defence of the prisoner 
 by Mr. (afterwards Lord) Erskine, who objected 
 to the indictment on the ground of the documents 
 not being Exchequer bills at all. He maintained that 
 the bills in question, being signed by a party not 
 authorized by the Act of Parliament, by virtue 
 of which Exchequer bills were created, were not 
 Government securities, but simply so many pieces of 
 paper. He said, "The foundation of the argument 
 used by the counsel for the Bank was, that the Bank 
 Act makes it a capital felony for any person to 
 embezzle the securities of the Bank of England, that 
 person being a servant of the Bank, and being en- 
 trusted with them ; but it was incumbent on the 
 learned counsel to prove that the prisoner at the bar 
 had embezzled the property of the Bank of England. 
 The signature to the Exchequer bills, as they are 
 called, had no more validity than if they had been 
 signed by the officer of this court." * The prisoner 
 was acquitted ; but he was afterwards tried on 
 another indictment, found guilty, and condemned to 
 death. His sentence was commuted to imprisonment, 
 and he was confined in Newgate for many years. 
 
 * Lawson's Historii of Bankimj.
 
 THE BANK OF ENGLAND 93 
 
 Four years afterwards, in 1807, Abraham New- 
 land, wlio had served the Bank for more than 
 fifty years, resigned his appointment. The directors 
 offered him an annuity, which he declined ; they 
 then presented him with a service of plate worth 
 £1050, which he accepted. He died in the following 
 year worth £200,000. It should not be supposed 
 that he accumulated this large sum from his salary, 
 for he had opportunities afforded him of participating 
 in the various loans negotiated by his employers. 
 
 Mr. Clement Scott has contributed the following 
 account of Mr. Newland to the Daily Graphic: 
 
 " He was the son of a baker in Castle Street, St. Mary's 
 Overy, South wark, where he was born April 23, 1730. 
 Appointed at the age of eighteen a clerk in the Bank 
 of England, he became, in January, 1782, chief cashier, 
 with a liberal salary and a suite of rooms. For a quarter 
 of a century he never slept a single night out of the 
 building, and during this time the services he rendered 
 the Bank were recognized as of the most important kind. 
 When the Bank stopped payment in 1797 Mr. Newland's 
 information, given before a Committee to the House of 
 Lords, threw the chief light upon the circumstances which 
 led to that measure and upon the general concerns of the 
 establishment. In 1803 a clerk named Astlett, who had 
 risen from a humble position to one of the highest situa- 
 tions in the Bank, embezzled Exchequer bills to the amount 
 of £320,000, and the shock operated so severely on Mr.
 
 94 1796- I 8o8 
 
 Newland's mind that he never recovered from it, and in 
 September, 1807, resigned his post after nearly sixty years' 
 service. He lived scarcely two months after his resignation, 
 his death taking place at Highbury November 21, 1807, 
 and his funeral on the 28th in the Church of St. Saviour, 
 Southw^ark. He died unmarried, leaving property behind 
 him to the amount of £130,000. The celebrity of his 
 name, attached for so long a period to the paper currency 
 of this country, gave rise to the well-known song of 
 ' Abraham Newland,' written by the junior Charles Dibdin." 
 
 In 1804, by permission of the Privy Council, the 
 Bank had some dollars made at Mr. Boulton's manu- 
 factory in Birmingham. They were stamped on the 
 reverse with the words, " Five Shilling Dollar, Bank 
 of England, 1804." 
 
 In 1808 a Finance Committee was appointed by 
 the Government, to inquire into matters concerning 
 the public expenditure. They examined the accounts 
 of the Bank of England, and suggested various 
 reductions in the amounts payable to the latter 
 by the Government. These reductions w^ere agreed 
 to by the directors, and a meeting of the proprietors 
 was held, when a resolution, of which the following 
 is the substance, was passed : That £500,000 be 
 withdrawn from the fund appropriated for unclaimed 
 dividends, for the use of the public. That such 
 alteration shall take place in the rate of the manage-
 
 THE BAAK OF ENGLAND 95 
 
 ment, as shall be a saving to the Government of 
 £70,000 per annum ; and that three millions sterling 
 shall be advanced to the State, without interest, 
 the payment to be secured by Exchequer bills, to be 
 made payable at the signing of a definitive treaty 
 of peace. It has been computed that the loss of 
 interest on the above three millions to the conclusion 
 of the war, amounted to above one million sterling. 
 Some notable forgeries of bank-notes were discovered 
 during the same year. At that time quite a brisk 
 trade was carried on in forged notes, its principal 
 centre being Birmingham. Towards the close of 
 1808, one Vincent Alessi, an Italian, went to 
 Birmingham to order some manufactures suitable 
 for export to Spain. In the course of the day he did 
 business with a brass-founder, who eventually offered 
 him "another article" on which a good profit could 
 be made, at the same time showing him a sample. 
 The other article was a forged Bank of England note. 
 The ofi"er at that time was declined, but in the 
 evenins^ Alessi received a visit from a man named 
 John Nicholls, and agreed to take some of the forged 
 notes at the rate of six shillings in the pound, and it 
 was arranged that in ordering further supplies, Alessi 
 should write for so many dozen candlesticks — No. 1,
 
 96 I 796-1808 
 
 2, or 5, according to the amounts of the notes 
 required. The police, however, were on the track 
 of these swindlers, and soon had Alessi in custody. 
 They allowed him to become king's evidence, and 
 used him as a trap by which to catch Nicholls. 
 Alessi wrote to him stating that he was going to 
 America, and required twenty dozen candlesticks, 
 No. 5 ; twenty-four dozen. No, 1 ; and four dozen, 
 No. 2, which he requested Nicholls to bring to him. 
 The unsuspecting Nicholls came to London, and 
 Alessi made an appointment to settle the business. 
 Nicholls came again at the appointed time. The 
 police were concealed within hearing, and, at a 
 signal from Alessi, they appeared on the scene 
 just as the so-called "candlesticks" were being 
 handed over. The police also captured thirteen 
 dealers in forged notes in one day, and found 
 counterfeit notes in their possession to the amount of 
 £10,000. These forgeries were very bad ones, some 
 bearing imitation signatures of cashiers long since 
 dead ; they seldom escaped detection at the Bank 
 of England, but they were, nevertheless, a fraud 
 on the public. The holders passed them on un- 
 educated people mainly in Wales and Scotland.
 
 CHAPTER VIII. 
 
 1809-1821 
 
 The Bullion Committee — Panic— Issue of tokens — Motions in Parlia- 
 ment — Lord King's notice— Lord Stanhope's Act — High price of 
 gold — Acts of Parliament — Conspiracy to raise prices of funds- 
 Restriction Act prolonged— Increase of capital — Notes paid in gold 
 — Grundy's action — Forged notes and capital punishment — Bank 
 prohibited from paying gold for notes — Statement showing surplus 
 — The Currency Bill — Act for prevention of forger\' — Cash jmy- 
 ments resumed — Turner's frauds. 
 
 rpHE working out of the principle of what is 
 -■- called " Gresham's law "—that is, that the intro- 
 duction of an inferior substance as currency tends 
 to drive out of the country the more valuable 
 metal — that principle had been producing its in- 
 evitable result since the substitution by Order of 
 Council of a paper instead of a gold currency, so 
 that in May, 1809, gold had risen from £3 17s. lOUL 
 per ounce — ^the Mint price — to £4 lis. per ounce, 
 and a guinea, which in England represented only 
 21s., on the Continent would realize 29s. 
 
 In February, 1810, a Committee was appointed 
 
 97
 
 98 1 809- 1 82 1 
 
 l)y the House of Commons to take into consideration 
 the high price of bullion, the state of the circulating 
 medium, and the rate of foreign exchanges. After 
 two sittings, on February 22nd and May 25th, the 
 Committee presented their report. After compli- 
 menting the directors of the Bank of England for 
 having acted during the sus]3ension of cash payments 
 with ' ' integrity and regard to public interests," the 
 Committee reported, in reference to the high price 
 of bullion and the adverse rate of exchange, " that 
 this excess is to be ascribed to the want of a 
 sufficient control in the issues of the Bank of 
 England, and originally to the suspension of cash 
 payments, which removed the natural and true 
 control," and they recommended " that the circulat- 
 ing medium of this country should be brought back 
 with as much speed as is compatible with a wise 
 caution, to the original principle of cash payments, 
 at the option of the holders of bank paper." In 
 conclusion, the report named two years as the limit 
 within wdiich the Bank Restriction Act should termi- 
 nate, and advised an issue of notes for less than £5 
 each for a short time after the return to cash pay- 
 ments. 
 
 In the year 1811 a period of wild commercial
 
 THE BANK OF ENGLAND 99 
 
 speculation was followed by one of panic and dis- 
 aster. There had been an enormous increase of 
 exports to many countries, particularly to South 
 America and the West Indies. All kinds of articles 
 were shipped in large quantities, in some cases 
 without regard to the suitability of the articles to 
 the climate or the requirements of the people to 
 whom they w^ere sent. One over-enterprising mer- 
 chant, it is said, sent a consignment of skates to 
 Jamaica ! As might have been expected, reaction 
 set in ; prices fell, there were numerous bankruptcies, 
 factories were closed, and numbers of workmen were 
 thrown out of employment. Money became scarce, 
 and on July 9th the Bank issued silver tokens of 
 the denominations of three shillings and eighteen 
 pence. Between that date and the year 1815 the 
 amount of these tokens put into circulation was 
 nearly four and a half millions sterling. Credit 
 was shaken, and the merchants of London held a 
 meeting to consider what should be done to support 
 it. Government was called upon to interfere. 
 Parliament authorized the advance of six millions 
 to those who could give satisfactory security. 
 
 On May 6th a resolution, founded on the report 
 of the Bullion Committee recommending the
 
 loo 1809-1821 
 
 resumption of cash payments, was considered by 
 the House of Commons, but was rejected by a 
 large majority. Seven days later Mr. Vansittart 
 brought forward a motion in which it was asserted 
 that the price of gold had advanced and that Bank 
 of England notes had not depreciated. After some 
 remarkable speeches the motion was carried. 
 
 The affairs of the Bank engaged the attention 
 of Parliament again in the year 1 8 1 1 , in consequence 
 of the refusal of Lord King, a descendant of the 
 celebrated Locke King, to receive bank-notes at 
 their nominal value. His position is explained in 
 the following circular which was sent to his 
 tenants : 
 
 "By lease dated 1804 you have agreed to pay the annual' 
 rent of in good and lawful money of Great Britain. 
 
 In consequence of the late depreciation of paper money I 
 can no longer accept of any bank-notes at their nominal 
 value in payment for satisfaction of an old contract. I 
 must, therefore, desire you to provide for the payment of 
 your rent in the legal coin of the realm : at the same time, 
 having no other object than to receive payment of the real 
 intrinsic value of the sum stipulated by agreement, and 
 being desirous to avoid giving you unnecessary trouble, I 
 shall be willing to receive payment in either of the manners 
 following, according to your option : 
 
 " 1. By payment in guineas.
 
 THE BANK OF ENGLAND 
 
 "2. By payment in Portugal gold coin, equal in weight 
 to the number of guineas requisite to discharge the debt. 
 
 " 3. By a payment in bank-notes of a sum sufficient to 
 purchase, at the present market price, the weight of standard 
 gold requisite to discharge the rent. The alteration of the 
 value of paper-money is estimated in this manner. The 
 price of gold in 1802, the year of your agreement, was £4 
 per ounce, the present market price is £4 14s., arising from 
 the diminished value of paper : in that proportion an addi- 
 tion of £17 10s. per cent, in paper-money will be required, 
 as the equivalent for the payment of rent in paper. 
 
 "(Signed) King. 
 
 "N.B. — A power of re-entry and ejectment is reserved 
 by deed in case of nonpayment of rent due. 
 
 " No draft will be received." 
 
 This attack on the currency of the nation — bank- 
 notes were part of that currency while the Order 
 in Council remained in force — could not be per- 
 mitted. Lord Stanhope met that attack by moving 
 a resolution in the House of Lords declarinfif it to 
 be illeo;al to o-ive more than 21 5. for a o;uinea or less 
 than 205. for a one pound note. Lord King defended 
 his action and others supported him, but the resolu- 
 tion was carried. Considerable alterations were made 
 in it in the House of Commons, but the principle
 
 I02 I 809- 1 82 I 
 
 remained untouched and the measure was carried 
 through the Lower House also/ 
 
 During the year the market price of gold reached 
 £5 lis., and bank-notes sank to 145. In spite of 
 Lord Stanhope's Act the traffic continued. When- 
 ever the Mint coined gold speculators sent the coin 
 abroad in order to reap the advantages of the 
 exchanges. 
 
 An Act (52 Geo. IIL c. 138) was passed in 1812 
 " for the further prevention of the counterfeiting 
 of silver tokens issued by the Governor and 
 Company of the Bank of England called dollars, 
 and of silver pieces issued and circulated by the 
 said Governor and Company, called tokens, and for 
 the further prevention of frauds practised by the 
 imitation of the notes or l)ills of the said Governor 
 and Company." 
 
 During that year and for some time after the 
 scarcity of gold continued. The wars of Buonaparte 
 created universal distrust and alarm on the Continent, 
 
 ^ This Act (51 Geo. III. c. 127) is entitled, " An Act for making 
 more effectual provision for preventing the current coin of the realm 
 from being paid or accepted for a greater value than the current value 
 of such coin ; for preventing any note or hill of the Governor and 
 Company of the Bank of England from being received for any smaller 
 sum than the sum therein specified ; and for staying proceedings upon 
 any distress by tender of such notes."
 
 THE BANK OF ENGLAND 103 
 
 and gold, when it left our shores, was either coined 
 into foreign money or hoarded to provide against 
 the uncertainties of the future. The historian 
 Knight says, " a guinea, a half-guinea, or a seven- 
 shilling piece had become a rare sight in Great 
 Britain." The fact that six Spanish dollars could 
 be purchased on the Continent for one guinea w^as 
 a temptation to send money abroad, which some 
 speculators could not resist. Mr. Lawson gives an 
 instance of how the matter worked out. " A parcel 
 of goods bought in London for £500 might have 
 been sold on the Continent for 400 s^uineas. Yet 
 for the 400 Q-uineas the merchant mio;ht have ob- 
 tained from his banker £580 or 552 guineas and 
 eight shillings." 
 
 On February 21st, 1814, funds were much 
 depressed in consequence of a check given to the 
 allied forces by Buonaparte. The regions of the 
 Bank of England and the Stock Exchange were in 
 a state of great excitement. Although it was a 
 " private day " at the Bank, the clerks in the stock 
 offices were busily engaged making transfers which, 
 contrary to custom, poured in from the Stock 
 Exchange. Many of these transfers remained in- 
 complete, for news had suddenly reached the
 
 I04 1 809-182 1 
 
 Metropolis, brought in haste by messengers from 
 Dover, that our forces had been victorious, 
 Buonaparte was slain, and the allied armies were 
 in possession of Paris. Funds immediately rose, 
 and sellers were no lonsjer anxious to sell. It was 
 afterwards discovered that the news was false and 
 had been circulated by means of a clever conspiracy. 
 Several persons were prosecuted and were condemned 
 to fine or imprisonment ; among them was Lord 
 Cochrane. 
 
 1815 was the year of Waterloo and peace ; 
 these great events had their effect on the Bank 
 as well as on the country generally. According 
 to the third Bank Eestriction Act, passed 
 November 30th, 1797, the restriction of cash 
 payments should have ceased six months after 
 the conclusion of the war ; but a new Act was 
 passed by which the Restriction Act was to remain 
 in force until July 5th, 1816, and after that date 
 the restriction was again prolonged more than 
 once. 
 
 The three millions lent to the Government without 
 interest became due in December. As the public 
 balances in the keeping of the Bank amounted to 
 a large sum, the Chancellor of the Exchequer wrote
 
 THE BANK OF ENGLAND 105 
 
 to the Governor to ask if the loan could be con- 
 tinued till the following year, and the request was 
 granted. 
 
 In 1816 an Act (56 Geo. III. c. 60) was passed 
 to transfer Unclaimed Stock to the National Debt 
 Commissioners. The accumulated profits of the 
 Bank enabled the directors to grant the proprietors 
 a bonus of 25 per cent, added to the amount of their 
 Stock. The sanction of Parliament was granted to 
 this arrangement, and the capital of the Bank was 
 increased from £11,642,000 to £14,533,000. The 
 consideration given to the Government for this 
 privilege was the loan of three millions for two 
 years without interest. 
 
 In the year 1817 the Bank of England prosecuted 
 one hundred and forty-two persons in connection 
 with forgeries. On April 17th in that year the 
 directors announced that after May 2nd they would 
 pay cash for all bank-notes of £1 and £2, dated 
 prior to January 1st, 1816, or would exchange them 
 for new notes. The confidence of the public was 
 shown by the fact that very few notes were pre- 
 sented. On September 18th the directors issued 
 another notice, stating that on and after the first 
 day of October then next ensuing they would be
 
 io6 1809-1821 
 
 ready to pay cash for their notes, of every descrip- 
 tion, dated prior to January 1st, 1817. 
 
 In 1818 a curious action was tried. Mr. Grundy, 
 a holder of Bank Stock, at a meeting of proprietors 
 held in the Bank Parlour, proposed that the whole 
 of the profits should he included in the dividend. 
 As his proposal was rejected he invoked the law ; 
 the cause was tried in the Court of King's Bench, 
 and, as might have been anticipated, judgment was 
 given against him. 
 
 Until this year the Bank had always detained 
 forged notes which were presented for payment, 
 but in 1818 two persons who had two of these 
 notes returned to them by the Bank, paid the 
 amount and kept the notes. The Bank prosecuted 
 them for having forged notes in their possession, 
 but they were acquitted. In consequence of that 
 decision the Bank adopted the plan of stamping 
 such notes in several places with the word 
 " Forged " and returning them to the parties pre- 
 senting them. 
 
 The manner of dealing; with such foro-eries caused 
 much dissatisfaction and discussion on account of 
 the numerous executions which followed detection. 
 On January 22nd a Committee was appointed by
 
 THE BANK OF ENGLAND 107 
 
 Parliament to inquire as to the best mode of pre- 
 venting the forgery of l)ank-notes, but the inquiry 
 had no practical result. From 1800 to 1810 
 inclusive, notes to the amount of over £101,000, 
 on presentation for payment, were refused as 
 forgeries, and at the time the Committee were 
 sitting such notes were coming in to the amount 
 of £30,000 per annum. A great number of persons 
 had been hanged, but the crime was not diminished. 
 It was the result of a caricature of the artist 
 Cruikshank that capital punishment for passing 
 forged bank-notes ceased.^ 
 
 On May 26th, 1818, the Bank of England gave 
 notice that books would be opened on "May 31st 
 and two following days for receiving subscriptions 
 to the amount of £7,000,000 from persons desirous 
 of funding Exchequer bills." As the idea had 
 gone abroad that the whole of the sum would 
 be immediately subscribed for, an extraordinary 
 scene was witnessed outside and inside the Bank 
 on the eventful May morning. So great was the 
 anxiety of the investing public not to miss the 
 opportunity of subscribing their names that many 
 
 ^ A facsimile of this caricature appeared in the Banker's Magadne for 
 June, 1846 ; and also in the Daily Graphic for Uecember 24th, 1891.
 
 io8 1809-1821 
 
 persons assembled outside tlie Bank as early as 
 two o'clock in the morning and waited admission. 
 The numbers gradually increased by the arrival of 
 others who were anxious to be in time, and when 
 the outer door was opened there was a general 
 rush. The crowd now filled the passage leading 
 to the chief cashier's office, and as the time for 
 commencing; business in that office was ten o'clock 
 there was still more than an hour to wait. When 
 at last that office was opened there was a tremendous 
 crush for admission, and so great was the struggle 
 that the door, a very substantial one, was forced 
 off its hinges. The major part of that struggling 
 crowd was doomed to disappointment, for the whole 
 seven millions was subscribed for l)y the first ten 
 persons who reached the counter. 
 
 In the year 1819 a bill was passed through 
 Parliament in two nights to prohibit the Bank from 
 paying away any more gold under their notices of 
 April 17th and September 18th, 1817. This bill was 
 thus hurried through in consequence of a Committee 
 of the House of Commons having reported that the 
 Bank had paid away over five millions in gold, which 
 had nearly all been exported to the Continent and 
 had there been re-coined into foreign money.
 
 THE BANK OF ENGLAND 109 
 
 All account laid Ijefore Parliament showed a 
 surplus in favour of tlie Bank of £5,202,320, 
 irrespective of its capital of over fourteen and 
 a half millions. 
 
 In this year, after having been again and again 
 deferred, the date of the resumj^tion of cash pay- 
 ments was definitely fixed by the j^assing of Peel's 
 Currency Bill. Although the passing of the 
 Restriction Act was not accomplished without 
 opposition, and although it caused a considerable 
 amount of inconvenience to the public, the Currency 
 Bill, which was to terminate the restriction, was 
 also opposed, and the House of Commons witnessed 
 the singular spectacle of father and son taking 
 opposite sides. A petition against the bill was 
 signed l^y some merchants of the City, and was 
 presented to Parliament by Sir Robert, the father 
 of Mr. Peel. The bill was passed, and it provided 
 that : 
 
 1. The Bank Ptestriction Act was continued absolutely 
 from July 5th, 1819, to February 1st, 1820. 
 
 2. Between February 1st and October 1st, 1820, the 
 Bank was required to pay its notes in gold bullion of 
 standard fineness, at the rate of £4 \s. per ounce, but not 
 to be liable for a demand for a less quantity than sixty 
 ounces at one time.
 
 no 1 809- 1 82 1 
 
 3. Between October 1st, 1820, and May 1st, 1821, the 
 Bank was required to pay its notes in gold bullion upon the 
 same plan, at the rate of £3 19s. 6d. per ounce. 
 
 4. Between May 1st, 1821, and May 1st, 1823, the 
 Bank was to pay in gold bullion upon the same plan, at 
 the rate of £3 17s. lO^d. per ounce, which was the Mint 
 price of gold. 
 
 5. From May 1st, 1823, the Bank was to pay its notes 
 in the gold coin of the realm. 
 
 6. But between February 1st and October 1st, 1820, 
 the Bank might make payments at a less rate than £4 Is., 
 and not less than £3 19s. 6d. per ounce; and between 
 October 1st, 1820, and May 1st, 1821, the Bank might pay 
 at any rate less than £3 19s. Qd., and not less than 
 £3 17s. 10 ^d., on giving three days' notice in the Gazette. 
 Such payments to be made in ingots or bars of gold of the 
 weight of sixty ounces. The Bank was also permitted to 
 pay in gold coin on or after May 1st, 1822. 
 
 7. All the laws which restrained the exportation of gold 
 and silver coin were repealed, and the coin was allowed to 
 be exported or melted without incurring any penalty. 
 
 The bill did not give satisfaction to the Bank 
 directors. They wished to be allowed to pay their 
 notes in gold bullion at the market price of the 
 day. 
 
 The 59 Geo. III. c. 76 was passed to prohibit 
 the Bank making advances to Government without 
 the authority of Parliament. But the Bank was
 
 THE BANK OF ENGLAND 
 
 allowed to purchase Exchequer bills, or to advance 
 money on them, but the amount of such bills was 
 to be laid annually before Parliament.^ 
 
 In 1820 an Act was passed for the better 
 prevention of forging and counterfeiting bank- 
 notes. This Act also permitted the signature of 
 the notes to be impressed by machine instead of 
 being signed by hand. 
 
 On May 1st, 1821, the Bank began to pay their 
 notes in gold. This was exactly a year earlier 
 than the date named in the Currency Bill ; but 
 the directors had got an Act (1 and 2 Geo. IV. 
 c. 26) passed through Parliament which permitted 
 them to pay cash at the earlier date. The gold 
 coins now issued by the Bank were sovereigns, 
 not guineas. £9,520,758 in gold were coined by 
 the Mint in this year. Sovereigns were first issued 
 in 1489, and again in 1542; then there was a 
 long interval, and the new sovereigns were first 
 issued in 1817.- 
 
 The history of an institution like the Bank of 
 
 ^ Gilbart's History of Banking. 
 
 2 GiLBART, in The History, etc. (edited by A. S. Alicliie), p. 60, says, 
 "1821 . . . Sovereigns of the ^alue of twenty shillings were now 
 coined." This is evidently a mistake ; see Francis' History, 
 Haydn's Dictionary of Dates, etc.
 
 England, which presents so many temptations to 
 human cupidity, must necessarily contain several 
 instances of crime, even if only the most remark- 
 able are recorded. 
 
 In 1821 it was found that a leaf had been 
 removed from a transfer - book, and the pages 
 re-numbered to make them run consecutively. This 
 led to the discovery of an ingenious fraud committed 
 by William Swiney Barnard Turner, a clerk in the 
 establishment. The transfer of £4,795 155. Navy 
 Five per Cent. Stock to the account of Sir Eobert 
 Peel had l)een altered to £14,795 15^., and the 
 £10,000 was transferred to a fictitious account, 
 which was opened in the name of John Penn, of 
 Highgate. Turner was called into the Bank parlour 
 and questioned. His answers not being satisfactory, 
 he was given into custody, but the directors wishing 
 to treat him leniently, he was not at once conveyed 
 to prison. The officer in charge locked him up in a 
 bedroom on the third floor of an hotel. In the 
 morning there was a sound of breaking glass, and 
 Turner was seen hano-ino; from the window. He fell 
 to the ground, was greatly injured, and was carried 
 to the hospital. On September 18th he was put 
 on his trial, and came into court on crutches.
 
 THE BANK OF ENGLAND 113 
 
 The prisoner had destroyed most of the proofs of 
 his guilt, and the principal witness to his hand- 
 writing w^as about to step down when the prisoner 
 whispered to his counsel, and the latter put the 
 question, " Do you believe the New Testament 
 to be a revelation from God " ? The witness was 
 confused, and hesitated. Several witnesses were 
 called to prove that he had often avowed his 
 unbelief. The jury returned a verdict of "Not 
 guilty." The prisoner was released, and retired 
 to the shores of Lake Como. He soon ran throuo;li 
 his money, and afterwards died in a back street 
 in London in great distress.
 
 CHAPTER IX. 
 
 1822-1825 
 
 Extension of time for small country notes — Its effect on the Bank — 
 Reduction of Interest on the Navy Five per Cents. — The Dead 
 Weight — Clerks pensioned off — Fauntleroy's Forgeries — His Execu- 
 tion — The Panic of 1825 — Evidence of Bank Officials — Failure of 
 Pole & Co. — Causes of the Panic — Help rendered by the Bank — 
 Saved by an Old Box of Notes. 
 
 AS the law stood prior to 1822, country bank-notes 
 ■^-^ under £5 were prohibited on the resumption of 
 cash payments by the Bank ; but in 1822 an Act 
 was passed permitting the country bankers to issue 
 such notes until the expiration of the Bank Charter 
 in 1833. This measure probably contributed to 
 bring about and to increase the distress which 
 prevailed in 1826, when so many country banks 
 failed. The directors of the Bank of England 
 considered it unfair to the Bank, as will be seen 
 from a memorandum delivered by them to the 
 Parliamentary Committee of 1832. In it they 
 stated that they were enabled to cancel their small 
 
 "4
 
 THE BANK OF ENGLAND 115 
 
 notes in 1821 ; "and in the following year (1822), 
 three years prior to the time fixed by Parlia- 
 ment, they were in a situation to furnish the 
 gold for paying off the country small notes, when, 
 without any communication with the Bank, the 
 Government thought proper to authorize a con- 
 tinuance of the circulation of the country small 
 notes until 1833. The consequence of that measure 
 was to leave in the possession of the Bank an 
 inordinate quantity of bullion (£14,200,000 in 
 January, 1824), and, further, to afford the power 
 of extension to the country bankers' issues, which, 
 it is believed, were greatly extended from 1823 to 
 1825." 
 
 In 1822 the Government reduced the interest 
 of the Navy Five per Cents, to four per cent, at 
 the option of the holders. Each holder who con- 
 sented received for each £100 old Stock, £105 
 new Stock, called "New Fours." The Bank agreed 
 to advance the money required to pay off dis- 
 sentients. 
 
 At this time the Government was paying the large 
 sum of five millions annually in pensions to the 
 retired officers of the Army, Navy, and Ordnance. 
 Being desirous of lessening the burden they entered
 
 ii6 1822-1825 
 
 into negotiations with tlie Bank, and agreed to pay 
 the latter an annuity of £585,740 per annum, to 
 commence April 5th, 1823, and to continue for 
 forty-four years. The directors of the Bank, on 
 their part, agreed to pay, between April, 1823, 
 and April, 1828, the sum of £13,089,419 for the 
 payment of the above-named pensions. This sum 
 has been commonly called the " Dead Weight," 
 for by the agreement a large portion of the Bank's 
 funds was locked up, and inconvenience, if not 
 jeopardy, was experienced in consequence. 
 
 A large part of the work of the Bank employees 
 is connected with the note circulation. When notes 
 of a lower denomination than £5 were abolished, 
 a good deal of that work ceased, and the directors 
 found that they did not require so many clerks. 
 A number were, therefore, discharged. On leaving 
 the Bank service they were granted either a pension, 
 or the value of a pension in a lump sum, at their 
 option. The conduct of the directors on this 
 occasion was considered very liberal, and gave 
 general satisfaction. 
 
 One of the most notorious forgers of modern 
 times was Henry Fauntleroy, who was executed 
 in 1824, He was a partner in the banking-house of
 
 THE BANK OF ENGLAND 117 
 
 Marsh, Sibbald and Co., of Berners Street. In 1814 
 lie was appointed one of three trustees for eight 
 children. He very soon after forged the signatures 
 of his co-trustees to a power of attorney, which 
 enabled him to sell the amount of Consols which 
 stood in their joint names. This forgery was 
 followed by many others. In time, the discovery 
 of the frauds was made by one of Fauntleroy's 
 co-trustees having occasion to refer to one of the 
 accounts at the Bank of England, when he found 
 to his dismay the whole of the Stock in question, 
 amounting to £30,000, had been sold out.' The 
 police were communicated with, and the next 
 morning Mr. Fauntleroy was arrested in his office. 
 It is a remarkable fact that among his papers a 
 document, in his own handwriting, was found 
 giving a list of his forgeries, and his reasons for 
 committing them. The latter statement is as 
 follows : "In order to keep up the credit of our 
 house, I have forged powers of attorney for the 
 above sums and parties, and sold out to the 
 amount here stated, and without the knowledge 
 of my partners. I kejDt up the payments of the 
 dividends, and made no entries of such payments 
 in our books. The Bank first l)egan to refuse to
 
 ii8 
 
 discount our acceptances, and to destroy the 
 credit of our house. The Bank shall smart for 
 it." He was tried at the Old Bailey on October 
 30th, and immediately found guilty, and sentence 
 of death was passed upon him. Great efforts were 
 made to save his life, but they were unavailing, 
 and the execution took place on November 30th 
 in the presence of an enormous crowd of people. 
 The loss to the Bank by Fauntleroy's forged 
 powers of attorney was £360,000. 
 
 In the month of December, 1825, a panic 
 commenced, which proved to be one of the most 
 severe experienced for many years. The Bank 
 of England was almost compelled to stop pay- 
 ment ; at one time there were bank-notes in 
 circulation to the amount of twenty millions, 
 when the coin to meet them amounted only to 
 a little over one million ; indeed, the Bank was 
 only saved Ijy the accidental discovery of a box of 
 £1 notes. During the panic several London and a 
 large number of country bankers sto^^ped payment. 
 
 This period of depression followed one of great 
 apparent prosperity. During that year and the 
 preceding one there had been great speculations 
 in joint-stock companies and foreign loans, which
 
 THE BANK OF ENGLAND 119 
 
 required large capital, and sent much gold out of the 
 country. 624 companies were projected, which would 
 require 372 millions to carry them out; some were not 
 started, and some were soon abandoned. The 245 
 which were started absorbed seventeen and a half 
 millions. The foreign loans which were contracted 
 for in England from 1823 to 1826 amounted to the 
 sum of £52,394,571. 
 
 In December, 1825, the course of exchange was 
 unfavourable and caused a demand for gold for 
 exportation. The Bank were then under the 
 necessity of restraining their issues. Sir Peter 
 Pole & Co., who were agents in London for several 
 country bankers, were in difficulties and applied 
 to the Bank for assistance. Mr. Kichards, the 
 Deputy Governor of the Bank, thus described the 
 state of affairs in his evidence before the Committee 
 of the House of Commons in the following year : 
 
 " I think I can recollect," said Mr. Pilchards, " on the first 
 Saturday in December, having come home after a very weary 
 and anxious day from the Bank, receiving a visit from two 
 members of this Committee and one of our bankers at my 
 own house, stating a difficulty in which a banking-house 
 near to the Bank was placed. ... I was called upon because 
 the Governor was particularly connected with the house of 
 Pole & Co. by marriage and other circumstances of relation- 
 
 E
 
 I20 1822-1825 
 
 ship. After speaking upon the subject for some time I was 
 pretty sure that I could answer for the firmness of the 
 Bank, and I ventured to encourage these gentlemen to hope 
 that upon anything like a fair statement the Bank would 
 not let this concern fall through. It was agreed that upon 
 the following morning (Sunday) we should meet as many 
 directors as I could get together, with the three gentlemen 
 who had called upon me, at the house of one of them, and 
 that in the meantime some eminent merchants, friends of 
 the house, should also be called to the meeting to assist with 
 their opinion. We so met ... it was agreed that £300,000 
 should be placed at the disposal of Pole & Co, the next 
 morning, for which the Bank was to receive, and did receive, 
 as securities a number of bills of exchange and notes of 
 hand, and, over and above, a mortgage on Sir Peter Pole's 
 property, which was to ride over the whole." 
 
 Notwithstanding the assistance given them by 
 the Bank, Sir Peter Pole & Co. stopped payment. 
 This stoppage caused the notes of country banks 
 to be discredited and general alarm was the con- 
 sequence, and that again increased the demands 
 on the Bank. The Bank having ceased to issue 
 small notes had to part with gold, and it did so 
 until its stock was reduced to the lowest point. 
 Mr. Harman, a director of the Bank, in his exami- 
 nation before the House of Commons Committee, 
 stated that, "At the latter end of December,
 
 THE BANK OF ENGLAND 
 
 1825, the amount of gold in the Bank coffers was 
 miserably low. The timely issue of the one-pound 
 notes worked wonders, and it was by great good 
 luck we had the means of doing it ; for it happened 
 that an old box containing a quantity of one-pound 
 notes had been overlooked, and they were forth- 
 coming at the lucky moment. This, as far as my 
 judgment goes, saved the country." 
 
 The crisis was at its height from Monday, 12th, 
 to Saturday, December 17th. Mr. J. H. Palmer, 
 the Governor of the Bank, gave his opinions and 
 experiences before the Committee already alluded 
 to. He said : 
 
 " I have always considered that the first step towards the 
 excitement was the reduction of the interest upon the 
 Government Securities ; the first movement in that respect 
 was, I think, upon £135,000,000 of Five per Cents., which took 
 place in 1823. In the subsequent year, 1824, followed the 
 reduction of £80,000,000 of Four per Cents. I have always 
 considered that reduction of interests, one-fifth in one year 
 and one-eighth in the other, to have created the feverish 
 feeling in the minds of the public at large which prompted 
 almost everybody to entertain any proposition for invest- 
 ment, however absurd, which was tendered. The excitement 
 of that period was further promoted by the acknowledgment 
 of the South American republics by this country and the 
 inducements held out for engaging in mining operations.
 
 122 1822-1825 
 
 and loans to those governments, in which all classes of the 
 community in England seem to have partaken almost 
 simultaneously. With those speculations arose others in 
 commercial produce which had an effect of disturbing the 
 relative values between this and other countries and 
 creating an unfavourable foreign exchange, which continued 
 from Octol)er, 1824, to November, 1825, causing a very 
 considerable export of bullion from the Bank — about seven 
 millions and a half." 
 
 Speaking of the assistance given by the Bank, 
 lie said : 
 
 " We lent by every possible means, and in modes we had 
 never adopted before. We took in Stock as security, we 
 purchased Exchequer bills, we made advances on Exchequer 
 bills, we not only discounted outright, but we made 
 advances on deposit of bills of exchange to an immense 
 amount, in short, by every possible means consistent with 
 the safety of the Bank; and we were not upon some 
 occasions over nice ; seeing the dreadful state in which 
 the public were, we rendered every assistance in our power. 
 
 " Did any communication take place between the Bank 
 and the Government respecting an Order in Council to 
 restrain payments in gold at that period ? — Yes ; it was 
 suggested by the Bank, 
 
 "What answer did His Majesty's Government give to 
 that? — They resisted it from first to last. 
 
 "The Bank of England issued one-pound notes at that 
 period. Was that done to protect its remaining treasure ? — 
 Decidedly ; and it worked wonders, and it was by great good
 
 THE BANK OF ENGLAND 123 
 
 luck that we had the means of doing it, because one box 
 containing a quantity of one-pound notes had been over- 
 looked and they were forthcoming at the lucky moment. 
 
 " Had there been no foresight in the preparation of these 
 one-pound notes ? — None whatever, I solemnly declare. 
 
 "Do you think that the issuing of the one-pound notes 
 did avert a complete drain ? — As far as my judgment goes, 
 it saved the credit of the country." 
 
 So it appears from tlie testimony of two of the 
 high ofhcials of the Bank that the credit of the 
 Bank and the country were saved by the finding 
 of an old box of small notes.
 
 CHAPTER X. 
 
 1826-1833 
 
 Banking Reform ^Proposals of the Government — Objections and 
 consent of the Bank — Lord Liverpool's SiJcecli — Abolition of Notes 
 under £5 — Money advanced on goods — Bank's monopoly curtailed 
 — Introduction of Joint Stock Banks — " Branch Banks " established 
 — Ojjposition of Country Bankers — Conversion of " New Fours " — 
 Fears of an attack on the Bank— Forgery and Circulation of 
 Forged Notes — Opposition to the Death Penalty — Petitions — 
 Alteration of the Law — Politics and Gold — Committee of Secrecy 
 — Renewal of Charter. 
 
 rpHE year 1826 was a year of banking reform; 
 -^ notes under £5 were abolished, branch banks 
 were established, and part of the Bank's monoj^oly 
 ceased. 
 
 The great panic which had so recently convulsed 
 the country impressed people with the idea that 
 some reform was necessary. The Government were 
 resolved to take immediate action, and on January 
 13th, Lord Liverpool and Mr. Robinson, the Chan- 
 cellor of the Exchequer, sent their proposals to 
 the Bank of England. Among the statements and 
 propositions of their paper were the following : 
 
 124
 
 THE BANK OF ENGLAND 125 
 
 " We believe that much of the prosperity of the country 
 for the hist century is to be ascribed to the general wisdom, 
 justice, and fairness of the dealings of the Bank ; and we 
 further think that during a great part of that time it may 
 have been in itself and hy itself fully equal to all the im- 
 portant duties and operations confided to it. But the 
 progress of the country during the last thirty or forty years 
 in every branch of industry, in agriculture, manufactures, 
 commerce, and navigation, has been so rapid and extensive 
 as to make it no reflection upon the Bank of England to 
 say, that the instrument which hy itself was fully adequate 
 to former transactions, is no longer sufficient, without new 
 aids, to meet the demands of the present times. We have, 
 to a considerable degree, the proof of this position in the 
 very establishment of so many country banks. Within the 
 memory of many living, and even in some of those now 
 engaged in public affairs, there were no country banks, 
 except in a few of the great commercial towns. 
 
 " If the concerns of the country could be carried on with- 
 out any bank than that of the Bank of England, there 
 might be some reason for not interfering with their exclusive 
 privilege ; but the effect of the law at present is to permit 
 every description of banking except that which is solid and 
 secure. 
 
 " Let the Bank of England reflect on the dangers to which 
 it has been recently exposed ; and let its directors and 
 proprietors then say whether, for their own interest, such an 
 improvement as is suggested in the banking system is not 
 desirable and even necessary.
 
 126 1826-1833 
 
 " There appear to be two modes of attaining this object. 
 
 "First. That the Bank of England should establish 
 branches of its own body in different parts of the country. 
 
 " Secondly. That the Bank of England should give up its 
 exclusive privilege as to the number of partners engaged in 
 banking, except within a certain distance of the Metropolis." 
 
 The directors took the communication of the 
 Government under consideration, and after passing 
 several resolutions in regard to it, they came to 
 the conclusion that they could ' ' not feel themselves 
 justified in recommending to the proprietors to 
 give up the privilege whicli they now enjoy, 
 sanctioned and confirmed as it is by the solemn 
 acts of the Legislature." After some correspondence 
 with the Government and some compromise being 
 arranged, a general Court of tlie Governor and 
 Company of the Bank of England was held on 
 February 3rd, at which the following resolution 
 was passed : — 
 
 " That this Court do consent to the terms proposed to the 
 Bank in the papers now read, and do request the Court of 
 Directors to carry the arrangement into effect." 
 
 In order to carry out the proposed alterations 
 and reforms, several Acts of Parliament were passed. 
 On the 17th February, on introducing one of these
 
 THE BANK OF ENGLAND 127 
 
 bills on banking into tlie House of Lords, Lord 
 Liverpool said, " The present system is one of the 
 fullest liberty as to what is rotten and bad, but 
 one of the most complete restriction as to all that 
 is good. By it a cobbler or a cheesemonger, without 
 any proof of his ability to meet them, may issue 
 his notes, unrestricted by any check whatever ; 
 while, on the other hand, more than six persons, 
 however respectable, are not permitted to become 
 partners in a bank with whose notes the whole 
 business of the country might be transacted. 
 Altogether the system is so absurd, both in 
 theory and practice, that it would not appear to 
 deserve the slightest support, if it was attentively 
 considered even for a single moment." 
 
 An Act (7 Geo. IV. c. 6) provided that no more 
 notes under £5 should be stamped, and those already 
 stamped should not be issued or reissued after the 
 5th April, 1829, under a penalty of £20, and the 
 Bank of England were required to make monthly 
 returns to the Treasury of the weekly amounts of 
 their notes under £5 in circulation. 
 
 The Act 7 Geo. IV. c. 7 was passed to enable 
 the Bank to advance money upon "deposits and 
 pledges," and under it the Bank, at the suggestion
 
 128 1826-1833 
 
 of the Government, made advances on the security 
 of" goods in Manchester, Glasgow, Sheffield, and 
 other towns, to the amount, in the aggregate, of 
 £366,000. 
 
 Another Act (7 Geo. IV. c. 46) was for the 
 *' better regulating " of banks. By clauses 1 and 2 
 it was enacted that 
 
 1. "Banks having more than six partners might carry on 
 business in England at a greater distance than sixty-five 
 miles from London, provided they have no establishment as 
 hankers in London, and that all the partners are liable for 
 the whole debts of the l^ank. 
 
 2. " The banks shall not issue their notes at a place 
 within sixty-five miles from London, nor draw any bills 
 on London for a less amount than £50." 
 
 These are the principal clauses of the Act which 
 abolished the monojDoly of the Bank of England, 
 except as regarded London and a radius of sixty-five 
 miles round, and permitted the formation of joint- 
 stock banks. Very little advantage was taken of 
 the liberty granted until 1833. During the first 
 four or five years from 1826 the formation of joint- 
 stock banks averaged about one per annum. The 
 first was formed in Lancaster, the second at Bradford, 
 and the third at Norwich. 
 
 The fifteenth clause of the above Act authorized
 
 THE DANK OF ENGLAND 
 
 129 
 
 the establishment of branches of the Bank of 
 
 England, or rather it was enacted to " prevent any 
 
 doubts that might arise" upon the subject. The 
 
 directors of the Bank complied with the wishes of 
 
 the Government in this matter, and during the same 
 
 and the few following years opened branches at the 
 
 places and dates here specified : 
 
 Gloucester* branch opened 19th July, 1826. 
 Manchester . ,, ,, 21st September, 1826. 
 
 Swansea* , 
 
 „ 23rd October, 1826. 
 
 Birmingham 
 
 1st January, 1827. 
 
 Liverpool , 
 
 „ 2nd July, 1827. 
 
 Bristol , 
 
 „ 12th July, 1827. 
 
 Leeds 
 
 „ 23rd August, 1827. 
 
 Exeter* , 
 
 17th December, 1827 
 
 Newcastle 
 
 „ 21st April, 1828. 
 
 Hull 
 
 2nd January, 1829. 
 
 Norwich* , 
 
 1st December, 1829. 
 
 The four branches marked thus * have been closed, 
 and others have been since opened. At the present 
 time the Bank has branches at 
 
 Manchester, 
 
 Plymouth, 
 
 Birmingham, 
 
 Portsmouth, 
 
 Liverpool, 
 
 Burlington Gardens 
 
 Bristol, 
 
 (" Western Branch.") 
 
 Leeds, 
 
 Fleet Street (" Law 
 
 Newcastle, 
 
 Courts Branch.") 
 
 Hull, 

 
 I30 1 826- 1 833 
 
 The opening of branch banks gave great dis- 
 satisfaction to the country bankers. On the 7 th 
 December, 18.26, they met at the London Tavern 
 in Bishopsgate Street and passed several resolutions, 
 among which were the following : 
 
 "That the late measures of the Bank of England in the 
 establishment of branch banks have the evident tendency 
 to subvert the general banking system that has so long 
 existed throughout the country, and which has grown up 
 with, and been adapted to, the wants and conveniences of 
 the public. 
 
 " That it can be distinctly proved that the prosperity 
 of trade, the support of agriculture, the increase of general 
 improvement, and the productiveness of the national 
 revenue, are intimately connected with the existing system 
 of banking. 
 
 " That the country bankers would not complain of rival 
 establishments founded upon equal terms ; but they do 
 complain of being required to compete with a great Com- 
 pany, possessmg a monopoly and exclusive pri\'ileges. 
 
 " That should this great corporation, conducted by direc- 
 tors who are not personally responsible, succeed, by means 
 of these exclusive advantages, in their apparent object of 
 supplanting the existing banking establishments, they will 
 thereby be rendered masters of the circulation of the 
 country, which they will be able to contract or expand 
 according to their own will, and thus be armed with a 
 tremendous power and influence dangerous to the stability 
 of property and the independence of the country."
 
 THE BANK OF ENGLAND 
 
 The meeting also appointed a deputation to wait 
 on Lord Godericb, the first Lord of the Treasury, 
 and Mr. Herries, the Chancellor of the Exchequer. 
 The result of the deputation's interview with Lord 
 Goderich and the Chancellor of the Exchequer was 
 reported by the chairman, Sir John Wrottesley, 
 Bart., M.P., to another meeting held at the same 
 place on December 16th. It amounted practically 
 merely to the fact that those gentlemen assured the 
 deputation that " all that had been communicated 
 should receive the most deliberate and serious 
 attention." 
 
 In 1828 other complaints of the country Ijankers 
 and a " humble memorial " were laid before the 
 Lords of the Treasur}^. They had some just cause 
 of complaint in the inequality of the stamp duties, 
 and were successful in their representations. An 
 Act of Parliament was in consequence passed, which 
 enabled country bankers to compound for their 
 stamp duties on the same terms as the Bank of 
 England. In reply to their memorial the Govern- 
 ment promised that " the interests of the country 
 bankers should not be neglected in any negotiation 
 between the Government and the Bank of England 
 for the renewal of the Bank Charter."
 
 132 1 826-1 833 
 
 The Bank was busy in the year 1830 with another 
 conversion of Stock. The Government reduced the 
 interest of the New Four Per Cents, (originally the 
 Navy Five Per Cents.) to three and a half per cent. 
 The Stock amounted to over £138,000,000, and was 
 then called the "New Three-and-a-half Per Cents." 
 
 In the latter part of this year there were great 
 fears of a mob roaking an attack on the Bank. The 
 revolutionary spirit which pervaded a great part 
 of the Continent — France, Belgium, Saxony, 
 Poland, and other parts — affected this country also. 
 Demands for reform became general and persistent. 
 London asked for an improved representation, and 
 the Duke of Wellington — as unpopular as a politi- 
 cian as he was popular as a soldier — intimated his 
 intention to resist any measure of reform that might 
 be brought forward. Riots first broke out in Kent. 
 Fires, the work of incendiaries, blazed night after 
 night; mills were attacked and machinery destroyed; 
 small bodies of men continually passed into the 
 Metropolis, and a large mob paraded the streets 
 carrying a tricoloured flag. Fear took possession 
 of peaceable citizens and shops were closed. The 
 King was to have attended a banquet given by the 
 Lord Mayor on the 9th November, but he deferred
 
 THE BANK OF ENGLAND 133 
 
 his visit to the City. All the assistants of the Bank 
 were required to remain on the premises, and casks 
 of biscuits were ordered in to provide for a state 
 of siege. The intentions of the mob, however, 
 were not so serious as was feared, or its courage 
 was not so great as to accomplish great things, for 
 the police attacked and dispersed it without much 
 difficulty ; the " old lady's " rest was not greatly 
 disturbed, and in twenty-four hours all danger was 
 over. 
 
 The history of counterfeit bank-notes is a sad 
 one, and it reveals the fund of dishonesty and 
 cruelty that exists in human nature. It has been 
 previously shown how much dissatisfaction had been 
 aroused by the publication of Mr. Cruikshank's 
 "Note" in 1819. In that year juries began to 
 show a reluctance to convict, and the opposi- 
 tion to capital punishments continued to increase. 
 But while the objections to "the extreme penalty 
 of the law" increased, the crimes of foro;ino; and 
 uttering bank-notes increased also, and to a greater 
 extent. The Act passed in 1820 " for the further pre- 
 vention " of those crimes had had little or no effect. 
 Sir Samuel Romilly said he believed the feelings 
 of the people of England were against the punish-
 
 134 1826-1833 
 
 ment of death for forgery, and that the increase of 
 the crime showed that the severe laws had not had 
 the effect of preventing forgeries. The humane 
 and thoughtful part of society demanded an altera- 
 tion of the law or an improvement of the note, 
 for the bank-note was easily imitated. Some 
 blamed the Bank for these executions, and accused 
 the directors of inhumanity or indifference. Those 
 accusations were not entirely merited. The directors 
 had one hundred and eight projects regularly 
 classified and arranged, with specimens of the pro- 
 posed new notes, but all these proposed alterations 
 had been successfully imitated by the Bank 
 engraver. They were placed before the appointed 
 Commissioners, who agreed with the opinion that 
 none of the projects could be of any advantage. 
 In some instances even the directors had supplied 
 the projectors with funds to enable them to carry 
 their ideas into efifect. 
 
 Juries continued to refuse to convict, although 
 in some cases the evidence of guilt was very strong. 
 Many merchants and bankers refused to prosecute, 
 saying they would rather suffer loss than shed 
 blood ; but notwithstanding all this reluctance the 
 convictions and executions were very numerous.
 
 THE BANK OF ENGLAND 135 
 
 Mr. Francis has thus graphically described the 
 scenes of that time : 
 
 " Men were hung in strings. Monday mornings witnessed 
 a waste of human life alike horrifying and disgraceful. 
 Prosecutions increased ; enormous expenses were incurred ; 
 ' examples were made,' to use the phrase of the period ; and 
 what was the result ? The crime continued. From one or 
 two manufacturers issued most, if not all, the foiged notes 
 which were in circulation ; and the manufacturer of 
 thousands remained ■ unscathed, while the issuer of one 
 was hung. They were sold to ignorant, uneducated, and 
 almost irresponsible men for a few shillings in the pound ; 
 and there were always a sufficient number urged by want, 
 desire, or vice to run the risk, who accomplished their 
 circulation." 
 
 Many petitions were presented to Parliament 
 against capital punishments, and none in favour of 
 them. One of the petitions sent in by the country 
 bankers contained nine hundred signatures ; another 
 contained only three signatures, but they were 
 names of great weight in the City, the first of 
 them being known in all the civilized world. 
 They were Mr. N. M. Rothschild, Overend, Gurney 
 and Co., and Mr. Sanderson. In 1830 Sir Robert 
 Peel brought in a l)ill to abolish capital ^punishments 
 in certain cases. It was passed in the Commons, 
 
 L
 
 136 I826-I833 
 
 but was thrown out by the Lords. Another bill 
 was brought in in 1832 and passed in both Houses. 
 It abolished hanging for forgery except in cases of 
 forged wills and powers of attorney. 
 
 Money has sometimes proved to be " the sinews 
 of war" in political as well as in military matters. 
 The reform agitation of 1832 was the cause of a 
 run on the Bank. Lord John Russell's Reform 
 Bill to abolish pocket-boroughs w^as thrown out by 
 a majority of eight. The King went down to the 
 House and prorogued Parliament till May 10th. 
 Then came an election with its accompanying 
 excitement. The bill was re-introduced, and 
 passed the Commons by a large majority ; liut 
 again it w^as rejected by the Lords. The Ministry 
 resigned, and Lord Lyndhurst and the Duke of 
 Wellington were sent for. The popular excite- 
 ment increased ; riots broke out, beginning in 
 Kent ; members of the Upper House were 
 attacked, and clubs and sword-sticks were in 
 great demand. Bills were posted about the 
 Metropolis containing the words, " Stop the 
 Duke! Go for gold!" The latter part of this 
 advice was taken — the public went for gold. 
 One man drew out £20,000 in notes from Jones,
 
 THE BANK OF ENGLAND 137 
 
 Lloyd & Co. (bankers) and presented tliem at 
 the Bank of England ; the run lasted for a week, 
 and the specie was reduced to £4,919,000. Many 
 persons sold Stock and the prices of funds fell ; 
 when the run ceased they brought back their gold 
 and repurchased Stock at a heavy loss. 
 
 In the same year the question of the renewal 
 of the Bank Charter was discussed. On May 
 22nd, in the House of Commons a Committee of 
 Secrecy was apj)ointed to inquire into the ex- 
 pediency of the renewal of the Charter and into 
 the system on which banks of issue in England 
 and Wales were conducted. The Committee had 
 the accounts of the Bank laid before them, and 
 they examined the directors of the Bank and 
 others. 
 
 On August 11th they delivered their report. 
 In it they stated that there was " more or less 
 information " on the points referred to them 
 for consideration and inquiry, "but on no one of 
 them was it so complete as to justify the Com- 
 mittee in giving a decided opinion." They there- 
 fore submitted, as the report states, " the whole 
 evidence which they have taken, with very few 
 exceptions, to the consideration of the House. . . .
 
 138 I826-I833 
 
 The only parts of the evidence which they have 
 thought it necessary to suppress, are those which 
 relate merely to the private interests of individuals." 
 The report concludes with the following testimony 
 to the flourishing condition of the Bank : "Of the 
 ample means of the Bank of England to meet all 
 its engagements, and of the high credit which it 
 has always possessed and which it continues to 
 deserve, ho man who reads the evidence taken 
 before this Committee can for a moment doubt ; 
 for it appears that, in addition to the surplus rest 
 in the hands of the Bank itself, amounting to 
 £2,880,000, the capital on which interest is j)aid 
 to the proprietors, and for which the State is 
 debtor to the Bank, amounts to £14,553,000, 
 making no less a sum than £17,433,000 over and 
 above all its liabilities." On May 2nd, 1833, Lord 
 Althorp, the Chancellor of the Exchequer, wrote 
 to the Governor and Deputy Governor, making 
 "proposals for the purpose of renewing the Bank 
 Charter." The following is an epitome of those 
 proposals : 
 
 1. To renew the Charter for twenty-one years, 
 reserving power, if the Government should think 
 fit, to give a twelvemonth's notice to the Bank
 
 THE BANK OF ENGLAND 139 
 
 that the Charter sliall expire at the end of eleven 
 years. 
 
 2. That no banking company of more than six 
 partners should issue notes payable on demand in 
 London or within sixty-five miles of it. 
 
 3. Bank of England notes to be a legal tender 
 except at the Bank of England or its branches. 
 
 4. Relates to the usury laws. 
 
 5. Accounts of bullion, securities, notes, etc., to 
 be sent in weekly, as a confidential paper, to the 
 Chancellor of the Exchequer ; these accounts to 
 be consolidated at the end of each quarter and 
 published in the Gazette. A bill to be introduced 
 into Parliament for the regulation of country 
 banks. 
 
 In return for the advantages the above pro- 
 positions were likely to confer upon the Bank, the 
 Government expected " some considerable pecuniary 
 advantages from the Bank in the management of 
 the Government business." The Government to 
 repay 25 per cent, of their debt of £14,500,000, and 
 the Bank to deduct £120,000 annually from their 
 charge for the management of the Government 
 business. 
 
 After one or two meetings to consider the matter
 
 I40 1826-1833 
 
 the proprietors of the Bank of England agreed to 
 the proposed terms, but in consequence of the 
 opposition of the country bankers Lord Althorp 
 postponed legislation in regard to them ; but the 
 other proposals passed into law, embodied in the 
 Act 3 & 4 William IV. c. 98.
 
 CHAPTER XL 
 
 1834-1844. 
 
 The War of the Banks — The Act respecting Joint-Stock Banks — 
 Formation of the London and Westminster Bank— J. W. Gilbart 
 — Applications to Committee of Bankers and Bank of England 
 refused — Action brolight by Bank of England — Failure of the 
 Governor — Speculation and depression — Banks in difficulties— The 
 Northern and Central Bank — £108,000 left in a cab — Disgraceful 
 disclosures— Large advances — Specie reduced five millions — Forged 
 Exchequer Bills — Mr. Smee's imi^rovements — Light sovereigns — 
 Hoarded notes — The Bank Act — Petitions and deputations — Pro- 
 visions of the Act — Robbery of Consols. 
 
 /^ REA.T companies and corporations possessing 
 
 ^-^ exclusive privileges have been very tenacious 
 
 of what they consider their rights, and . have often 
 
 in defence of them been led into actions of a harsh 
 
 and sometimes of a petty nature. The relations 
 
 of the Bank of England with their new rivals, 
 
 the Joint-Stock Banks, during the first few years 
 
 of the existence of the latter, were not of an 
 
 amicable or even justifiable kind. 
 
 It appeared to some people to be doubtful 
 
 whether the establishment of Joint-Stock Banks in 
 
 141
 
 142 1 834- 1 844 
 
 London or within a radius of sixty-five miles 
 thereof was really illegal, as the phraseology of 
 some of the Acts of Parliament was not particularly 
 clear. Mr. H. D. Macleod says, that "The dis- 
 covery was made in 1822 by Mr. Jopling that 
 the Bank Charter did not prohibit Joint- Stock 
 Banks being formed in London, and carrying on 
 their business on the method adopted by the 
 London bankers." In order to settle the question, 
 a clause was inserted in the Act mentioned at the 
 close of the last chapter. The important part of 
 that clause reads as follows : 
 
 " And whereas doubts have arisen as to the construction 
 of the said Acts, and to the extent of such exclusive 
 privilege ; and it is expedient that all such doubts should 
 be removed ; be it therefore declared and enacted that any 
 body politic or corporate, or society, or company, or partner- 
 ship, although consisting of more than six persons, may 
 carry on the trade or business of banking in London, or 
 within sixty-five miles thereof, provided that body . . . 
 do not borrow, owe, or take up in England any sum or sums 
 of money on their bills or notes payable on demand, or at 
 any less time than six months from the borrowing thereof, 
 during the continuance of the privileges granted by this 
 Act to the said Governor and Company of the Bank of 
 England." 
 
 The doubts that had existed having been allayed.
 
 THE BANK OF ENGLAND 143 
 
 a committee was formed for the establishment of 
 the first Joint-Stock Bank in London. The Bank 
 was called the London and Westminster Bank, 
 and Mr. John William Gilbart, who was then con- 
 ducting the business of a bank in Waterford, was 
 invited to be the manager. The committee could 
 not have chosen a better man for that important 
 position. Mr. Gilbart was a man of high intelli- 
 gence and of g;ood business habits. He was born 
 in London, of Cornish parents, in 1794, and at 
 nineteen years of age he entered a London bank 
 as junior clerk. For some years he belonged to 
 debatino; societies of which Edward Baines, John 
 Stuart Mill, and Lord Macaulay were members. 
 In 1827 he published his first book, A Practical 
 Treatise on Banking, which was followed by several 
 other works. He had had thirteen years' experience 
 of banking in London and six years as manager 
 of Joint-Stock Banks in L^eland when he was elected 
 to his new office. 
 
 The success which has attended Joint - Stock 
 Banks in London is greatly due to Mr. Gilbart's 
 energy and perseverance, for he assisted in the 
 formation of other banks also. He had to over- 
 come, and did overcome, the prejudices of the
 
 144 1834-1844 
 
 private bankers and the opposition of the Bank 
 of England. 
 
 The engagement of Mr. Gilbart by the London 
 and Westminster was made on October 10th, 1833. 
 On the following day he signed the first allotment 
 of shares. The new bank was opened for business 
 in March, 1834. The directors applied to the 
 committee of private bankers for admission to the 
 clearing-house, and their application was refused. 
 They also applied to be allowed to open a drawing 
 account at the Bank of England, and this too was 
 denied them. They soon had other difiiculties to 
 encounter. On May 7 th, when their bank had been 
 open only three months, they applied to the House 
 of Commons for powers to sue and to be sued. On 
 their petition being accepted and a bill being intro- 
 duced to give it efi'ect, the Bank of England 
 petitioned that their counsel might be heard against 
 the proposed measure. Notwithstanding this opposi- 
 tion the bill passed the Commons, but does not appear 
 to have got beyond the first reading in the Lords. 
 Later on the Bank of England o;ave the London 
 and Westminster Bank notice of their intention 
 to try the question of the power of the latter to 
 accept bills of exchange drawn at a shorter period
 
 THE BANK OF ENGLAND 145 
 
 than six montlis. After beino; tried in tlie courts 
 of law and equity the case was carried before the 
 House of Lords, who called in the assistance 
 of twelve judges ; the decision was in favour of 
 the Bank of Eno'land. The law in regard to both 
 the above points has since been altered, and, 
 fortunately, a better feeling now prevails in the 
 banking community, for experience has shown that 
 there is room for all. During the prosperous years 
 from 1833 to 1836 inclusive there was a great 
 increase in the number of Joint-Stock Banks, more 
 than forty having been started in the spring of the 
 last-named year. 
 
 In 1834 the private business of Mr. Eaikes, 
 the Governor of the Bank, got into difficulties. Out 
 of this fact arose the rumour that the Governor 
 of the Bank had failed, and in consequence there 
 was a panic among the small fundholders. They 
 thou2;ht the Bank itself was in dansfer, and hurried 
 up to town to get their money ; the dividend 
 payment of that time was a very crowded one. 
 
 During the years 1834 and 1835 there had been a 
 great deal of speculation in loans, in Joint-Stock 
 Banks, and in railways. That was followed in 
 183G by a season of depression followed by panic.
 
 146 1834- 1844 
 
 during which the Bank had to raise the rate of 
 interest. Two Joint-Stock Banks got into difficulties. 
 The Norwich and Norfolk Bank was a small affair ; 
 its business w^as sold to a new company, the 
 directors paying the balance of loss out of their 
 own pockets. The Northern and Central Bank was 
 formed in January, 1834, with a capital of one 
 million, £710,000 of which was paid up; at the 
 commencement of its career it made large pro- 
 fessions and had great apparent prosperity. It had 
 as many as thirty-nine branches. It w^as the custom 
 of the Bank of England at that time to refuse all 
 bills bearing endorsements of Joint-Stock Banks of 
 issue. Among bills presented to them for discount 
 was some paper of the Northern and Central Bank, 
 which was rejected. In the latter half of 1836 the 
 London agent of the Northern Bank was involved in 
 difficulties, and wrote to the head office, which was 
 in Manchester, for sufficient cash to meet urgent 
 claims. Mr. Evans, the manager at Manchester, 
 came to London on the 28th November, bringing 
 the needful funds. On arriving in London he 
 engaged a cab to convey himself and his bag to 
 an hotel. He entered his hotel in safety, but his 
 bag, which contained £108,000, he left in the cab!
 
 THE BANK OF ENGLAND 147 
 
 Discovering his mistake almost immediately, he tried 
 to overtake the cab, but failinoj to do so he com- 
 municated with the Mansion House authorities 
 and others, who took steps to recover the property. 
 Mr. Evans feared there would be a run on his 
 bank when the loss became generally known, so 
 he and Mr. Bradley, another official of his bank, 
 applied to the Bank of England for assistance, 
 and had an interview with the Governor. On the 
 receipt of a statement of the affairs of the Northern 
 Bank, the Bank of England agreed to advance 
 £100,000 at once and £400,000 later, on the con- 
 dition that all the branches except London and 
 Liverpool should be closed. On further examination 
 the statement that had been furnished proved 
 fallacious, and it was found that £600,000 would be 
 insufficient to put the bank straight. The investiga- 
 tion of the affairs of this bank by a Committee of 
 the House of Commons in 1837, disclosed trans- 
 actions that remind one of the doings of the 
 notorious Liberator Building Society. There were 
 bad bills, a secret ledger kept under lock and key, 
 advances to larsje amounts had been made to 
 directors, shareholders, and clerks, shares were 
 supposed to have been sold at premiums for the
 
 148 1 834-1844 
 
 purpose of increasing the dividend. The directors 
 owed to the bank no less a sum than £290,000, 
 and managers and clerks owed £24,000. The Bank 
 of England secured themselves by entering judgment 
 for one million, which would enable them, if 
 necessary, to enforce their claims on the share- 
 holders. The winding-up of the Northern and 
 Central Bank resulted in a loss to the shareholders 
 of ten shillings in the pound. In 1837 the Bank 
 of England again had to make large advances, in 
 consequence of commercial discredit which followed 
 the panic of the previous year and the diiBculties 
 of houses in the American trade. The depression 
 lasted during the two following years. In 1839 
 the Bank's stock of bullion was reduced nearly 
 five millions in six months. In April it amounted 
 to £7,073,000, but in October it declined to 
 £2,522,000. With the view of stopping the 
 demand for gold the directors gradually raised 
 the rate of interest till, on August 1st, it reached 
 6 per cent., and they gave notice that they were 
 willing to receive proposals for the sale of the Dead 
 Weight. Finding these measures not sufficiently 
 effective, they obtained a loan of £2,500,000 from 
 the Bank of France. From the 18th October, when
 
 THE BANK OF ENGLAND 149 
 
 the stock of gold was lowest, the pressure began 
 gradually to subside. 
 
 In 1841 it was discovered that a large number 
 of forged Exchequer bills were in the market. The 
 perpetrator was tlie chief clerk of the issuing office 
 of the Exchequer, and he had issued forged bills to 
 the amount of £800,000 in five years. The Bank 
 had advanced to a Mr. Tomkins the sum of £'11,000 
 on some of these bills. They brouo-ht an action for 
 the recovery of the money and obtained a verdict. 
 
 In the following year some important alterations 
 in the system of keeping the accounts of the Bank 
 were effected. Mr. William Eay Smee, a clerk in 
 the establishment, had previously, in 1839, made 
 certain alterations in the Cheque Office, that two 
 principals and seven clerks were enabled to do 
 the work better than it had formerly been done 
 by three principals and twenty-one clerks. Also 
 the plan was adopted of not issuing a note a second 
 time. In 1842 he improved the method of the 
 management of the National Debt. This was a task 
 of considerable magnitude, as 600,000 accounts had 
 to be dealt with. The improvement produced a 
 considerable saving of time and money, both to the 
 Bank and the public. Transfers were able to be
 
 ISO 1 834- 1 844 
 
 made eight or nine days earlier. The work of 
 preparing the dividends, which had formerly occu- 
 pied thirty-two days, was done by the new system 
 in twenty-three. Mr. Smee was rewarded by being 
 promoted to one of the highest offices — that of 
 Chief Accountant. 
 
 1843 brought extra work to the Issue Department. 
 Light sovereigns were called in ; four millions of 
 these answered the call, the average loss on each 
 sovereign being 2|d'. The Bank Note Office, too, 
 had some rather unusual business during the year. 
 One man sent in fourteen hundred one-pound 
 notes which had been hoarded. Another instance 
 of a mislaid or a hoarded bank-note occurred. 
 A £20 note came in which had been issued 
 a hundred and twenty-five years previously. 
 If that £20 had been left to accumulate at five 
 per cent, interest during all those years, the descend- 
 ants of the original owner would have been able 
 to claim about £15,000. 
 
 The year 1844 is remarkable for the passing of 
 the "Bank Act," by which, in addition to the 
 renewal of the Charter, considerable alterations 
 were made in the regulation of the currency. 
 When the measure was before Parliament there
 
 THE BANK OF ENGLAND 151 
 
 was a considerable amount of opposition to it 
 throughout the country. The Bankers Magazine 
 for July, 1844, says : 
 
 "It is not a mere question between the Bank and the 
 Government. . . . Several meetings have been held in the 
 provinces, at which petitions have been adopted against 
 the Government measure, the principal cause of dissent 
 being the proposal to make the currency fluctuate with 
 the exchanges by limiting the amount of notes hereafter to 
 be allowed in circulation. . . . The opposition" in London 
 and the chief towns has shown itself " by the presentation 
 of petitions, and by deputations to the Minister generally." 
 
 A petition against the limitation clause was sent 
 in by the London private bankers. It was signed 
 by Robarts, Curtis, & Co. and twenty-nine otlier 
 firms, many of whom no longer exist under their 
 original names. Another petition was sent in by 
 the Joint-Stock Banks of the midland counties. 
 It objected to the clauses 13 and 16, which related 
 to the country bank-note circulation. Mr. J. W. 
 Gilbart, Mr. Vincent Stuckey, and others repre- 
 senting the Committee of Deputies of Joint- Stock 
 Banks, had an interview with Sir Robert Peel, 
 and induced him to modify his plan as regarded 
 the country note circulation. 
 
 The Bank Act (7 and 8 Vict. c. 32) received
 
 152 1834-1844 
 
 the royal assent by commission on July 19tli, 
 and came into operation on August 31st, 1844. 
 Some of the principal provisions of the Act (7 and 
 8 Vict. c. 32) concerning the Bank are : 
 
 The issue of notes were to be made from a 
 department separate from the rest of the Bank, 
 to be called the " Issue Department of the Bank 
 of England." 
 
 That the Bank might issue eleven millions on 
 the security of the debt due from the public, 
 and three millions on Exchequer bills and other 
 securities. For any notes beyond the sum of 
 £14,000,000 the Bank must possess bullion in the 
 Issue Department to the value of such extra notes 
 issued. 
 
 That all persons might demand of the Issue 
 Department notes in exchange for gold bullion 
 at the price of £3 17^. 9d. per ounce of standard 
 gold. 
 
 That the reduction from the Bank's allowance 
 should be £180,000, instead of £120,000 as 
 formerly ; but the former sum included £60,000 
 as composition for stamp duty on notes, so the 
 sum paid by Government to the Bank remained 
 the same as before, viz., £340 per million on six
 
 THE BANK OF ENGLAND 153 
 
 hundred millions of the National Debt, and £300 
 per million on the excess of that sum. 
 
 That the Charter should remain in force until 
 the expiration of twelve months' notice, which 
 might be given after August 1st, 1855. 
 
 There has been much difference of opinion 
 respecting this Act, the discussion of which has 
 reached almost to the present day. 
 
 The following account of a robbery of the Bank 
 and the detection and pursuit of the criminals 
 appeared in periodicals of the time. A gross 
 fraud was committed on September 3rd by 
 William Burgess, a clerk of the Bank of England, 
 in connection with a confederate named Elder, 
 He had been successful in havino; the large sum 
 of £8200 Consols transferred from the name of 
 its owner, Mr. William Oxenford, and sold out, 
 without the knowledge and consent of that gentle- 
 man. Burgess identified Elder as being Mr. 
 Oxenford, and thus obtained the transfer. The 
 culprits absconded to America. In a November 
 number we read that, through the extraordinary 
 sagacity of the two brothers John and Daniel 
 Forrester, police officers, the fraud was defeated. 
 The Forresters were sent to hunt the fugitives.
 
 154 1834-1844 
 
 By pertinacious research they found that the two 
 delinquents had sailed in the By^itannia for America, 
 on September 4th. On the 19th John Forrester and 
 another Bank clerk, Mr. Bond, armed with warrants, 
 sailed in the Caledonia. The fugitives were traced 
 to Halifax, Boston, New York, Buffalo, Canada, 
 and back to Boston, where they had invested £7000 
 in a Bank and bought land. Elder was seized 
 in his house, and he hanged himself at night in 
 prison. Burgess escaped from an inn which had 
 been surrounded ; but the £7000 and 600 sovereigns 
 were secured. Burgess was afterwards captured, 
 brought to London, and put on his trial.
 
 CHAPTEK XII. 
 
 1845-1854. 
 
 Alteration of Rate objected to — Speculation and Panic — Railway 
 Mania — Opinions on effect of the Bank Act — Committees of the 
 Lords and the Commons — Causes of the Crisis — Bank Act 
 Suspended — Bank Rate eight per cent. — Letter from the Govern- 
 ment — Rejjly of the Bank — Suspension Removed — Reports of the 
 Committees — -Four o'clock Closing — Building Improvements — 
 Splitting Notes — A Stolen Note cashed — Penalties paid by Clerks 
 — New plan for Holidays — Bank Clerks' Library — Mr. Gladstone's 
 Conversion Bill — Discussion of Charter — Notice to open the Bank 
 at Ten o'clock — Objections of Private Bankers. 
 
 TT has been suggested that the directors of the 
 -L Bank acted as if they considered the Bank 
 Act had relieved them of some responsibility 
 in regard to the currency. In November they 
 commenced to reduce the rate of interest, and 
 their policy caused some adverse criticism. In 
 January, 1845, they issued a notice fixing the 
 rate for three months to come at 2^ per cent. 
 The Times said this was "a more complete departure 
 than any of the former acts of the directors from 
 their previous character of the regulators of the 
 
 155
 
 156 I845-I854 
 
 currency." Others said the Bank altered the rate 
 in order " to compete with the large discount 
 houses." "The rate was lowered to enable the 
 Bank to outbid its rivals in business . . . Bankers 
 are powerless ; they are bound to follow when 
 the Leviathan commands." 
 
 The years 1845, 6, and 7 were years of over- 
 speculation, pressure, and panic, leading to a 
 suspension of the " Bank Act " so recently passed. 
 The Act has been three times suspended ; the second 
 time was ten years later, viz., in 1857, and the 
 third in 1866. 
 
 The increased facilities for credit and the low 
 rate of interest occasioned for some time over- 
 trading in many branches of commerce. There 
 had been considerable speculation, and numerous 
 failures in the corn trade ; but the most extensive 
 operations were in railways. The speculation and 
 excitement reached such heights that the period 
 has been designated as that of the " railway mania," 
 and 1845 was the commencement of that period. 
 The country was overrun with surveyors, engineers, 
 and their assistants, preparatory to the planning of 
 new lines and the formation of new companies. 
 The weekly railway journals made arrangements to
 
 THE BANK OF ENGLAND 157 
 
 publish their papers twice a week, in order to satisfy 
 the craving for railway intelligence. The proposed 
 railways which had not received parliamentary 
 sanction amounted to six hundred in number in 
 September, 1845, and the capital proposed to be 
 raised for them amounted to £400,000,000. 
 
 About this time there was a discussion in the 
 press as to the effect of the late Bank Act on 
 the railway speculation. The opinion of The Times 
 was favourable to the Act, but the contrary was 
 maintained by The Economist and Tlie Atlas. 
 
 On November 6th the Bank rate was raised 
 to 34 per cent., and this had the effect of stopping 
 some speculation. 
 
 When Parliament met at the latter end of 1847, 
 committees were appointed by both Houses to 
 "inquire into the causes of the distress which 
 has for some time prevailed among the commercial 
 classes ; and how far it has been affected by the 
 laws for regulating the issue of bank-notes, 
 payable on demand." The report of the Lords' 
 Committee attributes the panic to "the unpre- 
 cedented extent of speculation," which had 
 occasioned overtrading. "This was more especially 
 felt in railroads, for which calls to a large amount
 
 158 I845-I854 
 
 were daily becoming payable, without corresponding 
 funds to meet them, except by the withdrawal of 
 capital from other pursuits and investments." 
 
 Before the same Committee, the Governor of 
 the Bank brought in evidence the failures of corn 
 speculators, and of an " eminent discount broker 
 having a large country connection," and he continued, 
 " Credit became affected by these failures, and 
 several London firms of high standing also failed. 
 Then followed in rapid succession the failure of 
 the Koyal Bank of Liverpool, the Liverpool Banking 
 Company, the North and South Wales Banking 
 Company, some private countr}'' banks, and the 
 Union Bank of Newcastle, followed by a tremendous 
 run upon the Northumberland and Durham District 
 Bank. To these disasters succeeded alarm, and an 
 almost total prostration of credit. The London 
 bankers and discount l)rokers refused to grant the 
 usual accommodation to their customers, and 
 necessarily obliged everyone requiring assistance 
 to resort to the Bank of England. Money was 
 hoarded to a considerable extent ; so much so, 
 that, notwithstanding the notes and coin issued 
 to the public, in October it exceeded by £4,000,000 
 or £5,000,000 the amount with the public in
 
 THE BANK OF ENGLAND 159 
 
 August ; still the general complaint was of a 
 scarcity of money. Credit was so entirely 
 destroyed that houses trading to distant coun- 
 tries, carrying on their business by means of 
 credit by a renewal of their acceptances as they 
 became due, were no longer able to meet their 
 engagements, and were forced to stop payment. 
 This was the state of things previous to the 
 issuing of the Government letter in October." 
 
 The letter alluded to is the one below, from Lord 
 John Russell, the Prime Minister, and Sir Charles 
 Wood, the Chancellor of the Exchequer : 
 
 "Downing Street, Oct. Ibtli, 1847. 
 
 "Gentlemen, — Her Majesty's Government have seen 
 with the deepest regret the pressure which has existed for 
 some weeks upon tlie commercial interests of the country, 
 and that this pressure has been aggravated by a want of 
 that confidence which is necessary for carrying on the 
 ordinary dealings of trade. 
 
 " They have been in hopes that the check given to dealings 
 of a speculative cliaracter, the transfer of capital from other 
 countries, the influx of bullion, and a feeling which the 
 knowledge of these circumstances might have been exj^ected 
 to produce, would have removed the prevailing distrust. 
 
 " They were encouraged in this expectation by the speedy 
 cessation of a similar state of feeling in the month of April 
 last.
 
 i6o 1845-1854 
 
 " These hopes have, however, been disappointed, and Her 
 Majesty's Government have come to the conclusion that the 
 time has arrived when they ought to attempt, by some 
 extraordinary and temporary measure, to restore confidence 
 to the mercantile and manufacturing community. 
 
 "For this purpose, they recommend to the directors 
 of the Bank of England in the present emergency to 
 enlarge the amount of their di.'^counts and advances upon 
 approved security ; but that in order to retain this operation 
 within reasonable limits a high rate of interest should be 
 charged. 
 
 " In present circumstances they would suggest that the 
 rate of interest should not be less than 8 per cent. 
 
 "If this course should lead to any infringement of the 
 existing law, Her Majesty's Government will be prepared 
 to propose to Parliament on its meeting a Bill of Indemnity. 
 They will rely upon the discretion of the directors to 
 reduce as soon as possible the amount of their notes if any 
 extraordinary issue should take place within the limits 
 prescribed by law. 
 
 " Her Majesty's Government are of opinion that any 
 extra profit derived from this measure should be carried 
 to the account of the public, but the precise mode of doing 
 so must be left to future arrangement. 
 
 "Her Majesty's Government are not insensible of the 
 evil of any departure from the law which has placed the 
 currency of this country upon a sound basis ; but they feel 
 confident that, in the present circumstances, the measure 
 which they have proposed may be safely adopted, and at 
 the same time the main provisions of that law, and the
 
 THE BANK OF ENGLAND 
 
 vital principle of preserving the convertibility of the bank- 
 note, may be firmly maintained. 
 
 " "We have the honour to be, Gentlemen, 
 " Your obedient, humble Servants, 
 
 (Signed) " J. Eussell. 
 
 " Charles Wood. 
 
 " The Governor and Depi;ty Governor 
 of the Bank of England." 
 
 To this letter the Bank sent the following reply : 
 
 "Bank op England, Oct. 25th, 1847. 
 " Gentlemen, — We have the honour to acknowledge your 
 letter of this day's date, which we have submitted to the 
 Court of Directors, and we enclose a copy of its resolutions 
 thereon. 
 
 " We have the honour to be, Gentlemen, 
 
 " Your most obedient Servants, 
 " James Moeris, Governor. 
 " H. J. Prescott, Deputy Governor." 
 
 At a Court of Directors, at the Bank of England, 
 Monday, October 25th, 1847 : 
 
 " Eesolved — 
 
 " 1. That this Court do accede to the recommendation 
 contained in the letter from the First Lord of the Treasury 
 and the Chancellor of the Exchequer, dated this day, and 
 addressed to the Governor and Deputy Governor of the 
 Bank of England, which has just been read. 
 
 " 2. That the minimum rate of discount on bills not 
 having more than ninety-five days to run be 8 per cent.
 
 i62 1845-1854 
 
 "That the advances be made on bills of exchange, on 
 stock, Exchequer bills, and other approved securities, in 
 sums of not less than two thousand pounds, and for a 
 period to be fixed by the Governors, at the rate of 8 per 
 cent, per annum." 
 
 The Bank had occasion to issue only £400,000 
 in notes in excess of the limit imposed by the Act 
 of 1844, and confidence was restored. On the 23rd 
 November the Government informed the Bank that 
 as the purpose of their letter of October 25 th had 
 been fully answered, it was unnecessary that it should 
 continue anj^ longer in force. 
 
 The opinion of the Lords' Committee on the effect 
 of that Act is given in their report, which states 
 that : 
 
 " The Committee . . . have come to the conclusion that 
 the recent panic was materially aggravated by the operation 
 of that statute, and by the proceedings of the Bank itself. 
 This effect may be traced, directly, to the Act of 1844, in 
 the legislative restriction imposed on the means of accom- 
 modation, whilst a large amount of bullion was held in the 
 coffers of the Bank, and during a time of favourable ex- 
 clianges ; and it may be traced to the same cause, indirectly, 
 as a consequence of great fluctuations in the rate of 
 discount, and of capital previously advanced at an unusually 
 low rate of interest. This course the Bank would hardly 
 have felt itself justified in taking, had not an impression
 
 THE BANK OF ENGLAND 163 
 
 existed that, by the separation of the issue and the banking 
 departments, one inflexible rule for regulating the Bank 
 issues had been substituted by law in place of the discre- 
 tion formerly vested in the Bank." 
 
 The Committee of the House of Commons 
 delivered a report in favour of the continuance 
 of the Act without alteration—" in opposition to 
 the opinions of by far the majority of the witnesses 
 who were examined. "1 The witnesses who supported 
 the Act maintained that it secured the convertibility 
 of the bank-note. 
 
 It had been for some time under consideration 
 whether it would not be desirable and practicable 
 for the banks of the Metropolis to close to the 
 public at four o'clock instead of at five. A great 
 deal of work has to be done after a bank closes 
 its doors to the public before the balance is struck 
 and the clerks can go to their homes. The directors 
 of the Bank of England were favourable to the 
 movement, and were looked to by the other banks 
 to take the lead in the matter ; but they deferred 
 coming to a decision till they knew how the altera- 
 tion would suit the public generally. In 1847 they 
 received a memorial from merchants and others 
 
 ^ Gilbart's History, etc.
 
 1 64 
 
 1845-1854 
 
 favourable to sucli an alteration, so the directors 
 issued a notice that on the 1st May, 1848, the 
 Bank would be closed for "counter business" at 
 four o'clock instead of at five as before. All the 
 City bankers and Joint-Stock Banks and most of the 
 West-end bankers aoreed to close at four likewise, 
 
 
 ,-._ 
 
 
 ^^ 
 
 Lj^^HgHL^^ 
 
 
 Z^^ 
 
 ^^^^^hI |i 
 
 1^^ 
 
 f 
 
 
 % 
 
 
 1 
 
 
 EAST FACADE. 
 
 but some of the West-end bankers held out for the 
 old hours for a time. Soon after, however, the 
 banking-houses of Coutts, Strahan, Eansom, Herries, 
 and Bouverie, decided that they would close at four 
 on and after the 2nd October. 
 
 1848 was a year of revolutions on the Continent,
 
 THE BANK OF ENGLAND 
 
 165 
 
 and a fear of revolution, or at least serious riots, in 
 this country. It was the year of the Chartist riots, 
 when special constables were sworn in for the pro- 
 tection of life and property in the City, when no 
 one knew what to expect next, and when nothing 
 particular happened after all. However, the alarms 
 
 BULLION COURT. 
 
 had some substantial effect in the structural altera- 
 tions that were being made in the Bank buildings. 
 A parapet wall was raised all round above the 
 cornice, partly in order to make the appearance 
 of the edifice more in accordance with the surround- 
 ing buildings, and partly to afi"ord cover to the
 
 i66 1845-1854 
 
 forces enofaged in defending the Bank against any 
 attack that might be made upon it. In the follow- 
 ing year the Private Drawing Office was built. It 
 is a fine hall, about 138 feet in length, 46 in depth, 
 and 45 feet in height, lit by windows in the north 
 wall, looking on to the garden, and by dome sky- 
 lights in the roof 
 
 In 1848 Mr. W. Baldwin, a print-mounter and 
 cleaner, called at the Bank, at the request of the 
 directors, and showed them by demonstration that 
 he could split a bank-note into two pieces. It was 
 stated at the time that the process was already 
 known at the Bank, and that no inconvenience was 
 expected to result from it. 
 
 At the close of the year some persons blamed the 
 directors for acting in a harsh and unjustifiable 
 manner to some of their clerks, who were more or 
 less concerned in the payment of a stolen and 
 stopped note. 
 
 The circumstances were as follow : About two 
 years previously a clerk returning from Jones, Lloyd 
 and Co.'s Banking-house, where he had received 
 cash for his " charge," missed his case, containing 
 £1700, when he reached the Lothbury gate of 
 the Bank. One day in December, 1848, a person
 
 THE BANK OF ENGLAND 167 
 
 presented one of the missing notes, £1000, at the 
 counter, and asked for two £500 notes in exchange. 
 The number of the stolen notes had been cleverly 
 altered by a 6 having been altered to a 0. The 
 clerk who received it referred to his "stop" card, 
 and, not finding the number there, passed the note 
 on to the pay clerk. The person who presented the 
 note then went to another clerk, received a thousand 
 sovereigns in exchange for the two £500 notes, and 
 departed with the plunder. The directors decreed 
 that the loss should be made good in the following 
 manner : The clerk who marked the note for pay- 
 ment to pay £300, because he failed to detect the 
 alteration in the number ; the inspector who handed 
 the note to the cashier to pay £150, probably for the 
 same reason ; the clerk who gave gold for the two 
 £500 notes to pay £100, because, believing the 
 person presenting the note to be a banker's clerk, he 
 did not refer to his superior ; the clerk who had 
 accepted "James Street" written on the note as a 
 sufficient description, to pay £100; and the clerk 
 who had lost the note to pay £350. 
 
 Clerks' holidays, which up to that time appear to 
 have been somewhat irregular, were, in 1849 
 organized into a better system. The directors then
 
 i68 1845-1854 
 
 made arrangements that all persons in the employ of 
 the Governor and Company should be allowed annual 
 leave of absence, from nine days to three weeks, 
 according to length of service. The lists of leave 
 were divided into four parts, each part containing 
 the names of those who were to go on leave after 
 each dividend payment, when the work gets slacker. 
 A clerk whose name would be down to go in the 
 April quarter one year, would he down in June 
 quarter the following year, and so on ; so that no 
 one had an unfair advantage over another, and each 
 would be able to take his holiday in the best season 
 in his turn. This system has worked very well up 
 to the present time, but the length of the leave 
 granted has been increased more than once since the 
 system was first established. 
 
 Another occasion on which the liberality of 
 the management was manifested was the establish- 
 ment of the Bank of England Library and Literary 
 Institution. The formation of the library was 
 sanctioned and promoted by the directors. A 
 gentleman of the Bank wrote to a journal in 1850 : 
 " We have succeeded, so far, beyond our most 
 sanguine expectations ; our subscription list numbers 
 560 members, nineteen of whom subscribed for
 
 THE BANK OF ENGLAND 169 
 
 life £4. The directors voted £500, and several 
 individual members of the Court have made 
 most magnificent donations. A draft for £100 
 was handed in by one of them." The directors 
 also set apart three rooms for the use of the insti- 
 tution, and many volumes of valuable works were 
 presented. 
 
 Any conversion of Government Stocks to a lower 
 rate of interest causes a vast amount of work to the 
 managers of the National Debt ; it follows that 
 Mr. Gladstone's bill of 1853 brought a busy time 
 to the staflp of the Bank. That eminent financier 
 considered that the rapid development of the 
 wonderful resources of Australia and California, 
 the general prosperity of trade, and the lengthened 
 maintenance of Consols above par, warranted him in 
 reducing the interest on South Sea Annuities and 
 other minor Stocks to the amount of £9,500,000, 
 and on Consols and Reduced to the amount of 
 £30,000,000. The bill received the royal assent 
 on the 9th May, and on the 10th the necessary 
 books were opened at the Bank. 
 
 During the year 1854 the periodical discussion 
 in the press on the approaching renewal of the 
 Bank Charter was revived. The term of the
 
 I70 1 845- 1 854 
 
 Charter would expire on August 1st in the follow- 
 ing year. 
 
 On the 9th January the directors issued a notice 
 to the effect that from the 1st March the business of 
 the establishment would commence at ten instead of 
 nine o'clock. The Joint-Stock Banks were favourable 
 to that arrangement, but the private bankers 
 objected, and the order was rescinded after a 
 correspondence between the Bank of England and 
 the Committee of Private Bankers. 
 
 On the 23rd February, Mr. J. G. Hubbard, 
 the Governor, acknowledged the receipt of a 
 memorandum of the objections of the bankers, 
 which concluded with an expression of their 
 " earnest hope that they " — the Bank of England 
 — "would not carry the same into effect." The 
 memorandum was signed — 
 
 Barclay, Bevan, Tritton & Co. 
 Prescott, Grote & Co. 
 Glyn, Mills & Co. 
 Jones, Lloyd & Co. 
 Barnett, Hoare & Co. 
 Dimsdale, Drewett & Co. 
 Haukey & Co. 
 Eobarts, Curtis & Co.
 
 THE DANK OF ENGLAND 171 
 
 In his reply, Mr. Hubbard said that if the bankers 
 "should modify their present objections, the Bank 
 would gladly entertain any proposition they may 
 offer." 
 
 LOTHBURY FACADE.
 
 CHAPTER XIII. 
 
 1855-1856. 
 
 A New Bank-Note— Increase of Note Circulation — The Crimean "War 
 Loan — Monetary Crisis— Sowing Seeds of Discredit — Fictitious 
 Warrants — Careers of J. W. Cole, of Maltby, of Davidson and 
 Gordon— Overend, Gurney & Co. and the Sham Warrants — 
 Evidence of D. B. Chapman and his Clerk — Oijinion of the Public 
 — A Series of Frauds — Strahan, Paul, & Bates — Arrest of tlie 
 Bankrupts— Escape and Surrender of Paul — Suicide of James 
 Sadleir — His Crimes— Remorse — Rohson and Redpath — The Royal 
 British Bank — London and Eastern Banking Corporation — Western 
 Branch Opened. 
 
 ON the 1st January, 1855, a new and improved 
 bank-note was issued. Some of the alterations 
 in tlie note consisted in the superior quality of the 
 paper, an improved watermark, a new engraving 
 of Britannia, and the substitution of the words, 
 " I promise to pay to bearer on demand," instead 
 of " I promise to pay Matthew Marshall or bearer." 
 The notes were printed by a steam press by Napier, 
 which struck them off at the rate of three thousand 
 per hour, 
 
 Mr. Alfred Smee, the Bank doctor and the author 
 
 172
 
 THE BANK OF ENGLAND 173 
 
 of many medical and scientific works, read a paper 
 to the Society of Arts, giving a description of the 
 note and the process of its manufacture. In that 
 paper, according to a report of this address which 
 appeared in the Bankers Magazine, Mr. Smee gave 
 many curious details of the extreme care taken 
 to protect the public from forgeries, " by preventing 
 a single sheet of paper from being possibly abstracted, 
 from the formation of pulp at the Bank paper mills 
 of Mr. Portal, to the final destruction of the notes." 
 In the following pages it will be shown how, in spite 
 of "extreme care" and every precaution which fore- 
 sio;ht can suQ-cj-est, thefts occur ao;ain and ao'ain in 
 the banking world. The reader will see shortly that 
 not merely " a single sheet " was taken, but a whole- 
 sale robbery of Bank paper occurred at Messrs. 
 Portal's mills. 
 
 In accordance with the Act of 1844, the bank- 
 note circulation was this year increased. At the 
 Court of Windsor, on the 7 th December, the royal 
 authority was given to the Bank to issue the 
 additional sum of £475,000 in notes, being about 
 two-thirds of the .£712,623 country bank-note 
 circulation which had been extinguished since the 
 year 1844.
 
 174 1855-1856 
 
 The Crimean War was now drawing to a close. 
 Notwithstanding two severe repulses our troops 
 had received, the balance of victory was on the 
 side of the allies. General Mouraviejff had sustained 
 a sanguinary defeat before the town of Kars. On 
 September 8th, after a furious bombardment of 
 three days, the assault of Sebastopol was made 
 in five places by the allied forces. The French 
 attack on the Malakhoff fort was completely 
 successful, and the Russians prepared to evacuate 
 the town. This war added sixteen millions to 
 the National Debt. The Government proposed to 
 issue a loan for £16,000,000, and negotiations 
 were opened for that purpose at a meeting held 
 at the Treasury on April 16th, when the Governor 
 and Deputy Governor of the Bank of England met 
 Lord Palmerston, Baron Rothschild, and a number 
 of capitalists in conference on the subject. 
 
 In October there was a monetary crisis, and 
 the Bank rate rose to 7 per cent., but wdiat 
 occurred was not at all comparable to the last 
 panic of 1847, or to those following in 1857 
 and 1866. However, the seeds of future com- 
 mercial crises had been, and were being, sown 
 about this time in the low tone of morality
 
 THE BANK OF ENGLAND 175 
 
 which was prevalent in some financial circles. One 
 of the principal symptoms of panic is want of 
 confidence in the stability of banking and mercantile 
 firms, and the prevalence of great dishonesty in 
 commercial affairs must be reckoned as one of the 
 factors which undermine that confidence. The end 
 of the forties and the beginning of the fifties was 
 a period of " high art " in crime, when men of 
 education, of good position, and of religious pro- 
 fession, like Sadleir, Redpath, Sir John Dean 
 Paul, and others, committed robberies of great 
 magnitude. The following examples may be given : 
 Mr. Laing, who was one of Cole's — and, we may add, 
 of Overend, Gurney, & Co.'s — victims, has given 
 a graphic account of the malpractices of Cole, 
 Davidson, and Gordon, in a pamphlet from which 
 some of the following particulars are drawn. ^ 
 
 John Windle Cole and Charles Maltby were 
 clerks in the well-known house of Forbes, Forbes, 
 and Co., of 9, King William Street. About the 
 year 1845 Cole was summarily dismissed. In 
 1846 he and a man named Johnson entered into 
 business on their own account, and in less than 
 two years they failed for £153,000, with assets 
 
 ' The Groat City Frauds, by Seton Laing.
 
 176 1855-1856 
 
 of something like Ad. in the pound. Johnson 
 asserted that his partner had acted dishonestly 
 while he was away in India. In 1848 Cole started 
 again in business in Birchin Lane, Cornhill, as 
 Cole Brothers, the brothers, Francis and James, 
 being in reality merely his clerks. Now Cole 
 deliberately carried out the plans he had formed 
 for raising money on counterfeit dock-warrants. 
 He rented a shed and an office on either side of 
 the entrance to Hagen's Wharf, Bermondsey 
 (Hagen's Wharf being in the occupation of Thomas 
 Groves & Sons), and into these small premises he 
 put his late fellow-clerk Maltby to act as his tool. 
 He had plates engraved and warrants printed in 
 imitation of the warrants issued by Messrs. Groves, 
 and caused them to be signed "Maltby & Co., 
 Wharfingers," and by these and other artful means 
 he got numerous counterfeit warrants, mixed with 
 a few genuine ones, accepted as security for advances 
 of large sums of money. Man}^ of these sham 
 warrants w^ere negotiated with Davidson and 
 Gordon, and by them were given as security for 
 loans to Overend, Gurney, & Co. 
 
 Davidson and Gordon, besides being mixed u^j 
 with Cole's swindles, had committed frauds in con-
 
 THE BANK OF ENGLAND 177 
 
 nectioii with a distillery they owned at West 
 Ham, Essex, The collapse of these fraudulent firms 
 commenced by the failure of Davidson and Gordon 
 in June, 1854. "On the 19th of that month," 
 wrote Mr. Laing, "the City of London was startled 
 by the intelligence which met every merchant on 
 'Change, that the house of Davidson and Gordon, 
 whose transactions were known to be of enormous 
 extent, had failed, and that the principals had 
 absconded two days previously." 
 
 In consequence of the above failure. Cole was 
 compelled to stop payment on the 27th of the 
 same month. Maltby fled to Ostend, but through 
 the exertions of Messrs. Laing and Campbell he 
 was expelled from Belgium, returned to England, 
 was arrested at Brentwood in Essex, was confined 
 to Newgate prison, and a week afterwards was 
 found dead in his cell. Cole also intended to 
 flee from the country, but was prevented. On 
 July 19th, the detective, Daniel Forrester, and a 
 man who knew Cole by sight, waited outside 
 the oftice in Birchin Lane for three hours. At 
 last, at eight o'clock in the evening. Cole came 
 out, and was immediately arrested. He had in 
 his possession £350 in money, and also eighteen 
 
 I
 
 178 1855-1856 
 
 warrants representing goods to the value of 
 £30,000. Two of these were genuine, and the 
 remaining sixteen were fictitious. On October 25th 
 he was tried at the Old Bailey, found guilty, and 
 sentenced to four years' penal servitude. 
 
 Davidson and Gordon's course was drawing to 
 a close in the early part of 1854. They owed 
 £500,000, besides Excise duties. In June they 
 gave the Excise officer a cheque (which was 
 afterwards dishonoured), delivered spirits, raised 
 all the money they could, and then bolted to the 
 Continent. They were tracked by the agents of 
 their creditors through Germany, Switzerland, and 
 Italy to Naples, at which city they were arrested 
 through the intervention of Lord Clarendon, and 
 they were brought to London, where they arrived 
 ten months after leaving this country. 
 
 Somebody has said, according to Charles Dickens, 
 " The law is an ass." Its course on this occasion 
 very nearly went to prove the truth of that 
 assertion. Although the guilt of these gentry 
 was notorious, they were tried twice for some of 
 the offences they had committed, and twice they 
 were acquitted on technical grounds. The third 
 trial was more successful. They were at last
 
 I 
 
 THE BANK OF ENGLAND 179 
 
 found guilty, and sentenced to two years' penal 
 servitude. 
 
 These robberies had been going on for three 
 years or more. In 1851 they very nearly came 
 to an end through irregularities that were dis- 
 covered in regard to the warrants, and they would 
 have ended seven months earlier than they actually 
 did, if persons of high standing in the City had 
 done their duty. When at last they were dis- 
 covered the revelation of these nefarious practices 
 was a blow to mercantile credit in the City, and 
 the feeling of distrust was intensified when it 
 became known that the eminent firm of Overend, 
 Gurney, & Co. had been concealing a felony to 
 enable themselves, as was supposed, to recover 
 the whole or a portion of the large sum of money 
 they had lost. At the end of June, 1853, Cole 
 was indebted to them to the extent of £207,630 
 for loans and interest. In October of that year 
 they knew they had been imposed upon by means 
 of fictitious warrants, yet they hushed the matter 
 up for seven months, during which time Laing 
 and Campbell, Barnett, Hoare, and Co., and 
 others lost large sums of money in dealing with 
 rogues who ouo;ht to have been handed over to
 
 i8o 1855-1856 
 
 tlie legal authorities montlis before. The fact 
 that although Overend, Gurney & Co. knew Cole, 
 Davidson, and Gordon to be thieves they did 
 not expose them, but continued on business 
 relations with them, became known to the public 
 on the examination of the j)risoners before the 
 magistrate on May 17th, 1853. In giving his 
 evidence Mr. David Barclay Chapman said, " I am 
 a member of the firm of Overend, Gurney & Co. 
 . . . The warrants we hold represent goods to 
 the amount of £80,000. . . . We discovered these 
 warrants were fictitious in October, 1853. I saw 
 Gordon at our house in Lombard Street in the 
 presence of Mr. Cole. We had previously made 
 the discovery that the warrants were not genuine. 
 ... I had sent the broker to examine the coj^per 
 and spelter." Mr. Chapman's memory was very 
 deficient as to what had been said at that meeting. 
 Mr. Bois, Overend's clerk, was present at the inter- 
 view, and he seemed to remember more about it. 
 He said, " The purport of the interview was to know 
 why the prisoners had acted in that way, by giving 
 so many fictitious warrants, and they ivere also asked 
 ivhat they could give to make up the dejiciency. 
 Gordon represented the distillery at West Ham
 
 THE BANK OF ENGLAND i8i 
 
 to be a very valuable property, and if he was 
 allowed time he could work it out. The real value 
 of the distillery was discussed, and it was arranged 
 to be made available to Overend, Gurney & Co. 
 iu a general way, by paying them out of the 
 j^rojits." Again at the trial in the Central Criminal 
 Court on the 21st and 22nd December Mr. Chapman 
 said, "We had to consider the subject in all its 
 bearings, and we determined to remain 'perfectly 
 passive. Without coming to any understanding 
 of any kind or description with either Cole or 
 Gordon, we did remain perfectly passive." Perfectly 
 passive ! while the thieves were allowed to swindle 
 right and left ! ! 
 
 The public and the press of course expressed 
 their opinions of this behaviour. The Economist 
 of June 3rd, 1855, said: 
 
 "Messrs. Overend, Gurney & Co. kept up the value of 
 these fictitious warrants in the market — whether or not 
 with the intention of covering some part of their own losses 
 we say not — after they knew them to be fictitious, and 
 are therefore morally and commercially, if not legally, 
 responsible for all the mischief and all the fraud per- 
 petrated by means of these warrants after October, 
 1853."
 
 i82 1855-1856 
 
 The Daily Neivs of June 22nd said : 
 
 "It is with deep regret we find it admitted that indi- 
 viduals who have had forged dock-warrants placed in their 
 hands as securities have compromised and hushed up the 
 matter on a prospect being held out to them of recovering 
 the money advanced. If any cabman detected in uttering 
 a bad half-crown were to allege that indeed he knew it to be 
 bad, but that having taken it unawares he thought to save 
 himself from loss by passing it off upon a customer, would 
 any magistrate listen to his plea ? Now we confess that the 
 person who allows the forger of a dock-warrant to escape on 
 obtaining indemnity appears to us to differ from our supposi- 
 titious cabman only on account of the greater magnitude 
 and mischief of the fraud at which he connives." 
 
 Is there any connection between these events and 
 those which subsequently occurred ? The moralist 
 may say that when people of good reputation depart 
 from the path of strict rectitude and honour they 
 show symptoms of decay ; the historian has simply 
 to present an impartial review of facts. Twelve 
 years after the above trial and disclosures the great 
 house of Overend, Gurney & Co. fell with a crash, 
 the results of which are felt almost to the present 
 day. 
 
 One of the celebrated trials of modern times was 
 that of Messrs. Strahan, Paul, & Bates, which took
 
 THE BANK OF ENGLAND 183 
 
 place at the Central Criminal Court, October 26th, 
 1855.^ These three gentlemen were among the 
 last anyone would have suspected of being guilty 
 of so far abusing the trust reposed in them as 
 to embezzle their customers' money. As a firm 
 Strahan's was one of the oldest and most respected 
 of the private banks of London. The firm was 
 originally Snow & Co., and had been established 
 two hundred years ; the place of business was in 
 the Strand, near Temple Bar. So far as was known 
 to the public the individual partners bore excellent 
 characters ; they were men beyond middle age ; at 
 the trial their names and ages w^ere stated to be : 
 William Strahan, aged 47 ; Sir John Dean Paul, 
 aged 52 ; and Robert Makin Bates, aged 64. Sir 
 John Dean Paul, Bart. , was a man of great piety : 
 there was scarcely a society belonging to the 
 Evangelical section of the Church of England in 
 which he did not hold some such office as treasurer 
 or trustee, and as a natural consequence these 
 societies kept their money in his bank. Mr. 
 Strahan was equally esteemed in his social circle, 
 
 ^ The particulars of Straliaii & Co.'s misdeeds and of the remaining 
 fraudulent transactions given in this chapter are derived from a 
 volume entitled Fads^ Failures, and Frauds, by D. Morier Evans. 
 O
 
 i84 1855-1856 
 
 and " down even to a week or two before tlie 
 failure of the house and the discovery of the frauds, 
 to breathe a word of suspicion against his honesty 
 would have been thought as unreasonable as to 
 dispute the credit of the Bank of England." 
 These two gentlemen inherited considerable private 
 property ; but not so Mr. Bates. He had been 
 for many years the confidential managing-clerk of 
 the firm, and on the retirement of a Mr. Snow in 
 1841, he was taken into partnership. 
 
 The causes of insolvency, to which state the 
 firm had sunk in 1849, were various. The partners 
 had been Ions; in the habit of borrowinsj from the 
 till for their personal wants, and they afterwards 
 got involved in the Mostyn collieries to the extent 
 of about £140,000, and with a firm of contractoi's 
 to the amount of between £300,000 and £400,000. 
 If they had closed their doors then they would 
 have been bankrupts, but they need not have 
 been felons. Instead of taking the only honour- 
 able course, they tried to tide over their difiiculties 
 first by raising money on their customers' securities, 
 and afterwards by selling them. Their constant 
 visits to the discount houses, and the large interest 
 they ofi'ered above market rates, led to suspicion,
 
 THE BANK OF ENGLAND 185 
 
 and on June 8th, 1855, a run set in which almost 
 drained them of cash, and on Monday, the 11th, 
 their failure was announced to the public. A week 
 afterwards warrants were granted by the Bow Street 
 magistrate against all three partners, for having 
 unlawfully disposed of securities to the value of 
 £22,000 belonging to the Kev. Dr. Griffiths, of 
 Rochester. Strahan and Bates were arrested with- 
 out difficulty ; but it appeared that Sir John Paul 
 planned an escape, but afterwards gave up the 
 idea. The circumstances, which were very unusual, 
 were these. After arresting Mr. Bates in Norfolk 
 Street, Strand, the officers started the same evening 
 to the beautiful neighbourhood of Nutfield, near 
 Reigate, where Sir John Dean Paul resided. They 
 found the baronet at home ; but as it was too late 
 to return to London that night they allowed their 
 prisoner to go to bed and arranged to take him to 
 town the next morning. 
 
 The following day they conducted him to Reigate 
 station, arriving barely in time for the train. In 
 fact, the train was moving when Sir John took 
 his seat in a second-class carriage. The officers were 
 in the act of following him, when a railway porter 
 pulled them back, exclaiming, " The train is in
 
 i86 1855-1856 
 
 motion, and you can't get in," and closed the door. 
 They immediately appealed to the superintendent, 
 who refused to signal the train to stop, but consented 
 to wire a message to the London terminus. The 
 officers went on by the next train, which arrived in 
 town only ten minutes after the one they had 
 missed. On inquiring of the station-master at 
 London Bridge if their prisoner had been detained, 
 they were informed that he " did not know Sir John 
 by sight, and of course, therefore, had taken no steps 
 in the matter." Search was made in vain for the 
 escaped prisoner, but no trace of him could be found. 
 However, at eight o'clock the following evening, 
 Sir John surrendered himself at Bow Street police 
 station, and stated that he " had no wish or intention 
 to deceive the officers," and that his impression 
 when he entered the train was that they were 
 following in an adjoining carriage. The trial, as 
 above stated, took place on the 26th October, the 
 result being that all three prisoners were sentenced 
 to "be severally transported for the term of fourteen 
 years." Mr. Bates was thought to be the least 
 culpable, and through the exertions of his friends 
 he was released at the end of three years. 
 
 Great sensation prevailed in the Metropolis on a
 
 THE BANK OF ENGLAND 187 
 
 Monday morning al)out the middle of February, 
 1856, by the announcement that the dead body of 
 Mr, John Sadleir, m.p., formerly a Junior Lord 
 of the Treasury and Chairman of the London and 
 County Bank, had been found on the previous 
 morning at the back of " Jack Straw's Castle," on 
 Hampstead Heath. He had taken a dose of essential 
 oil of almonds. At the inquest a verdict of felo 
 de se was returned. Mr. Sadleir was only forty-two 
 years of age when, by this rash act, he put an 
 end to what had appeared to be a brilliant and 
 hopeful career. 
 
 The cause of his suicide was not long; in being; 
 discovered. His life for years had been one of 
 wholesale fraud and forgery. He had forged title- 
 deeds in connection with the Irish Encumbered 
 Estates, he had manufactured a large number of 
 fictitious shares, and had circulated a quantity of 
 worthless bills, the acceptances to which he had got 
 signed by his needy fellow-countrymen. He was a 
 partner with his brother James in the Tipperary 
 Bank. Mr. Morier Evans thus sums up his misdeeds : 
 
 " The amount of misery which he caused is almost incal- 
 culable. In the Tipperary Bank, numbers of his poorer 
 fellow-countrymen had been induced, by specious represen-
 
 i88 1855-1856 
 
 tations of prosperity and false accounts, to embark their all. 
 Not three weeks before his death, he had, in conjunction 
 with his brother James, issued a report and balance-sheet, 
 representing the bank to be in the most flourishing condition, 
 and declaring a dividend of six per cent., with an additional 
 bonus of three per cent. Upon the faith of these periodical 
 statements, numbers of farmers, tradesmen, half-pay officers, 
 and others in a similar condition, became shareholders, and 
 were, in consequence, utterly ruined. From this establish- 
 ment alone, John Sadleir had, with the connivance of his 
 brother, contrived to abstract £200,000 ; and the total 
 defalcations of the bank, when it suspended payment, 
 amounted to £400,000. As chairman of the Eoyal Swedish 
 Kailway Company, he had issued false shares to the nominal 
 extent of £150,000, the whole proceeds of which he appro- 
 priated. What he obtained from other sources will probably 
 never be accurately ascertained, but the aggregate must be 
 something enormous." 
 
 No wonder, after such a record of crime, when 
 he knew one of his forged deeds was sent to Dublin 
 to be examined, and he saw his game was up, that 
 his pangs of conscience forced him to write the 
 following letter (which was read at the adjourned 
 inquest) on the night of his self-murder : 
 
 " Saturday night. 
 " I cannot live — I have ruined too many — I could not live 
 to see their agony — I have committed diabolical crimes 
 unknown to any human being. They will now appear,
 
 THE BANK OF ENGLAND 189 
 
 bringing my family and others to distress — causing to all 
 shame and grief that they should have ever known me. 
 "I blame no one, but attribute all to my own infamous 
 
 villainy. and hundreds of others ruined by my villainy. 
 
 I could go through any torture as a punishment for my 
 crimes, but I cannot live to see the tortures I inflict upon 
 others. «j, Sadleir. 
 
 " Telegraph to , and otherwise when you read this." 
 
 The list of the. great frauds of this year has 
 not yet come to an end. In the middle of 
 September the crimes of Robson were discovered, 
 and two months later those of Eedpath were found 
 out. Kobson was well known in the theatrical 
 world as the lessee of the Theatre Royal, Maryle- 
 bone, and the author of a "moral" play of some 
 literary merit, entitled, Love and Loyalty. He 
 robbed his employers, the Crystal Palace Company, 
 of some £27,000 by the forgery of shares. Redpath, 
 whom " the world regarded as a bland, easy, afifable 
 Christian gentleman, as remarkable for his good 
 taste as he was for his benevolence," by forging 
 transfers of the Great Northern Railway Company's 
 stock, appropriated to his own use, according to 
 Mr. Justice Willes, some £40,000 or £50,000 of 
 " tangible property " belonging to that company.
 
 igo 1855-1856 
 
 The Royal British Bank started professedly on 
 the "Scotch system" of banking in 1850, and 
 from that year till September 3rd, 1856, when 
 its doors were closed, its whole career was one 
 long course of swindling and issuing false balance- 
 sheets. The directors were put on their trial, 
 which lasted thirteen days, on February 13th, 1858. 
 They were found guilty, and received light sentences 
 of imprisonment of from three months to one year. 
 
 The last frauds of this period we have to record 
 are those which were carried on by Colonel Waugh, 
 a director, and Mr. J. E. Stephens, the manager 
 of the London and Eastern Banking Corporation. 
 The bank was opened in January, 1855, and was 
 closed early in the year 1857. The Colonel escaped 
 punishment by taking refuge in Spain ; and 
 Stephens, after failing to get whitewashed in the 
 Edinburgh Bankruptcy Court, joined him in his 
 exile. In about twenty-six months Colonel Waugh 
 had, without giving any available security, possessed 
 himself of £244,000, which was within £6000 of 
 the entire subscribed capital of the bank. When 
 it is remembered that these fraudulent transactions 
 — most of them in connection with banking — were 
 all being carried on during the same year (although
 
 THE BANK OF ENGLAND 191 
 
 they were commenced at various periods), it must 
 be admitted that there seemed to be an epidemic 
 of dishonesty, which reached its climax in 1856, 
 and doubtless those frauds had a share, perhaps a 
 large one, in bringing about the disastrous panic 
 of 1857, which resulted in the Bank of England 
 having again to suspend cash payments. 
 
 After the failure of Strahan, Paul, & Bates, 
 it appeared that more banking accommodation 
 was needed at the West End. Several Joint-Stock 
 Banks opened branches there, and the Bank of 
 England western branch was opened in Burlington 
 Gardens.
 
 I 
 
 CHAPTER XIV. 
 
 1857-1863 
 
 Committee on the Bank Charter Act — Increase of deposits — Discount 
 brokers and overtrading — The crisis of 1857 — Its causes — Failures 
 in America, Liverpool, and Scotland — Remarks of The Times — 
 Action of the Bank — Great drain of gold — Letter of the Govern- 
 ment — Reply of the Bank — Disasters of the crisis — The Bank 
 and the bill brokers — Another panic — Negotiation with the Bank 
 of France — Reduction of Government allowance — Clerks in 
 diihculties — Petition on the currency — The Great Exhibition — 
 Robbery from Portal's Mills — Trial and sentences. 
 
 A COMMITTEE of the House of Commons wMcli 
 -^^ had been appointed to investigate the working 
 of the Bank Charter Act, terminated its labours in 
 August, 1857, and some valuable information had 
 been collected. The deposits in Joint-Stock Banks 
 throughout the country had greatly increased. The 
 amount of deposits in the Joint - Stock Banks in 
 London alone, which in 1847 was £8,850,000, 
 had risen in 1857 to £43,100,000. These deposits, 
 with others, which flowed to London from all parts 
 of the country, were employed either by the 
 
 192
 
 THE BANK OF ENGLAND 193 
 
 bankers themselves in discountinoj bills for their 
 customers, or by bill brokers, who obtain the 
 money from the bankers. It was felt that there 
 was some danger in this practice in times of 
 excessive speculation. Mr. Neave stated before the 
 Committee that to the knowledge of the directors 
 of the Bank of England one broker had three 
 and a half millions, another four millions, a third 
 five millions, a fourth eight millions, and there 
 was reason to believe that a fifth had between 
 eight and ten millions. In the following year, as 
 will be shown presently, the Bank took such 
 action in the matter as they considered necessary 
 to lessen the evil. 
 
 The panic of this year came suddenly, but the 
 causes which led up to it were various, and may 
 be traced back for some time previously. The 
 Morning Herald, in reviewing the period of the 
 crisis, said : 
 
 " The extraordinary frauds and the singular operations 
 which have been traced in connection with trade exhiliit 
 a loose system of business. . . . The discovery at this 
 period of the liquidation of the London and Eastern 
 Banking Company, and the features which the management 
 exhibited, caused considerable consternation."
 
 194 1857-1863 
 
 In tlie early part of the summer a feeling of 
 horror and alarm spread throughout the kingdom 
 on the arrival of the news of the insurrection of 
 our Sepoy troops in India, and the massacre of 
 British women and children. This news had a 
 bad effect on the money market, and that effect 
 was heightened by the failure of remittances from 
 India, and the demand for specie for the Govern- 
 ment and the East India Company. 
 
 If one cause of the crisis came from the East, 
 another, and more immediate one, came from the 
 West. There had been a great deal of overtrading 
 in America, and also a combination of persons 
 " bearing " the Stock market, and for some months 
 previous to the tide of discredit crossing to England 
 a series of failures had commenced on the other side 
 of the Atlantic. The number of failures that took 
 place in the United States and Canada during the 
 crisis was estimated at 5123, and the aggregate 
 amount of liability at $291,800,000. In time the 
 distrust reached England, and houses began to ftiil in 
 Liverpool and Glasgow. The Liverpool Borough 
 Bank had to close its doors, which gave a heavy 
 blow to confidence. Dennistoun & Co.. of Liver- 
 pool, failed with liabilities of two millions, and soon
 
 THE BANK OF ENGLAND 195 
 
 after, early in November, the Western Bank of 
 Scotland and the City of Glasgow Bank failed for 
 some six or seven millions. There now appeared to 
 be a cessation of reliance on the stability of any 
 mercantile houses. The last blow to confidence was 
 the failure of the London discount firm of Sanderson 
 and Co. for over five millions. The Times in its 
 annual summary makes the following concise state- 
 ment in reo'ard to these failures : 
 
 " Our relations with America, though far more important, 
 have affected domestic and not diplomatic interests. In the 
 course of the summer it transpired that the railroads in the 
 United States were universally embarrassed by the dis- 
 proportionate magnitude of their debenture debts. When 
 the companies began to suspend payment of their obligations, 
 the overloaded fal)ric of commercial credit at once tottered 
 and gave way. The banks, which liad satisfied tlie require- 
 ments of a certain school of economists by a nominally 
 convertible issue, ceased to give gold in exchange for their 
 notes. Mercantile firms of the highest reputation broke in 
 rapid succession, and all remittances to foreign creditors 
 were simultaneously suspended. The rhetorical statement 
 that the subsequent crisis in England was caused by the 
 bankruptcy of a nation is rather coloured than exaggerated. 
 The annual balance of trade between the two countries 
 leaves a debt due from England, but the cotton crop of the 
 year has not yet been received, and American securities to 
 a large amount are always held by English capitalists.
 
 196 I857-I863 
 
 " When the news of the catastrophe arrived it was hoped 
 that a high rate of discount would prove a sufficient pre- 
 caution against the consequences which were apprehended; 
 but on this side the Atlantic, as well as in the United 
 States, an edifice of credit had been erected altogether 
 disproportioned to the foundations on which it rested. 
 Some great American houses yielded to an unavoidable 
 pressure, but a large proportion of the firms which have 
 failed had carried on their operations with the capital of 
 their creditors. Whatever may be the case with ordinary 
 traders, no honest and prudent banker can break. The 
 delinquent establishments at Liverpool and at Glasgow were 
 unable to meet their liabilities because the property of the 
 depositors and shareholders had been squandered on reckless 
 speculators. The scandalous proceedings which followed the 
 stoppage of the Western Bank of Scotland will long be 
 remembered. Auditors were found to certify the existence 
 of a surplus of two millions, which has since resolved itself 
 into a large deficiency. The landed aristocracy of the 
 neighbourhood joined in the protest against suspicion or 
 investigation, and a deputation was appointed to solicit 
 assistance from the public purse. 
 
 " The Scotch failures, coinciding with a temporary Irish 
 panic, produced a sudden demand for gold from London." 
 
 While these events were transpiring the directors 
 of the Bank were not reclining on a bed of roses. 
 Their stock of l)ullion was reduced by the require- 
 ments of France and the remittances to Scotland 
 and Ireland, as well as to America and tlie East.
 
 THE BANK OF ENGLAND 197 
 
 Tlie rate of discount had been reduced in the month 
 of July to 5^ per cent., but when the pressure came 
 the rate rapidly rose. On the 8th of October it was 
 raised to 6 per cent,, soon afterwards to 7 per cent., 
 on the 19 th to 8, and subsequently to 10 per cent. 
 At the same time that gold was being withdrawn in 
 so many directions the Bank were discounting bills 
 in the same proportion, as the demand for 
 accommodation was very great. On the 12tli 
 November the discounts amounted to £2,373,000. 
 How severely the resources of the Bank were 
 strained is demonstrated by the fact that, as 
 Mr. Michie has stated, although the sum due on 
 the evening of the 13th to the bankers alone was 
 £5,458,000, the Bank reserve amounted to only 
 £580,751, £384,144 of that sum being in the head 
 office in Threadneedle Street, and £196,607 in the 
 branches. So it appears that unless the Bank Act 
 had been suspended there was no other course left 
 open to the Bank but to stop payment. 
 
 Suggestions had been made for the intervention of 
 the Government when the panic was reaching its 
 height, and rumours were afloat that the Government 
 would then intervene, but it was not until the last 
 moment that the much-needed relief was aftbrded.
 
 198 I857-I863 
 
 On the 12tli the Prime Minister and the Chancellor 
 
 of the Exchequer wrote a letter to the Bank, a 
 
 portion of which is subjoined : 
 
 "Downing Street, V2th November, 1857. 
 
 " Gentlemen, — Her Majesty's Government have observed 
 with great concern the serious consequences which have 
 ensued from the recent failures of certain Joint-Stock Banks 
 in England and Scotland, as well as certain large mercantile 
 firms chiefly connected with the American trade." 
 
 The letter afterwards proceeds "to inform the Bank 
 of England that if they should be unable in the pre- 
 sent emergency to meet the demands for discounts 
 and advances upon approved securities without ex- 
 ceeding the limits of their circulation prescribed by 
 the Act of 1844, the Government will be prepared 
 to propose to Parliament upon its meeting a Bill of 
 Indemnity for any excess so issued." After some 
 remarks on the rate of discount, the appropriation 
 of the profit, and the importance of "maintaining 
 the letter of the law," the letter thus concludes : 
 
 " They (H.M. Government) rely upon the discretion and 
 prudence of the directors for confining its operation within 
 the strict linrits of the exigencies of the case." 
 
 " We have, etc., (Signed) " Palmerston. 
 
 " To the Governor and Deputy Governor " G. C. LEWIS, 
 
 of the Bank of England."
 
 THE BANK OF ENGLAND 199 
 
 In reply to the above letter the Governors sent 
 to the Government the following resolution of the 
 Court : 
 
 "At a Court of Directors held at the Bank on the 13th 
 November, 1857, resolved : 
 
 "That the Governors be requested to inform the First 
 Lord of the Treasury and the Chancellor of the Exchequer 
 that the Court is prepared to act in conformity with the 
 letter addressed to them yesterday. 
 
 (Signed) " John Bentley, Secretary." 
 
 Acting under the authority now granted to the 
 directors, they issued such an extra amount of notes 
 as was necessary to meet the requirements of those 
 who applied to them. After this measure of relief 
 a change for the better immediately appeared, and, 
 notwithstanding that during December there were 
 some serious failures, things steadily improved, and 
 by the end of the year the panic was virtually over. 
 Estimating this panic by the number of houses that 
 failed and the large amount of their liabilities, it 
 was more disastrous than either of the preceding 
 ones of 1837 and 1847. 
 
 In March, 1858, the directors of the Bank resolved 
 that from that period no further discount accommo- 
 dation should be granted to bill brokers. This
 
 20O 1 857- 1 863 
 
 course was decided upon in the interests of the 
 whole banking fraternity, in order that the brokers 
 should no longer have the power of encouraging 
 an excessive manufacture of bills of exchange, for 
 they would know that in future they would not 
 be able to fall back in reliance on the Bank of 
 England in times of sudden pressure. It was 
 afterwards stated that this resolution was come to 
 especially in regard to the old-established firm of 
 Overend, Gurney & Co., who almost monopolized 
 the Lombard Street discount business. The Daily 
 News stated that their transactions, which were 
 always extremely large, on extraordinary occasions 
 were said to amount to about a million sterling 
 per diem. 
 
 In 1859 there was another panic, produced by 
 rumours of war and invasion, but it was nothing 
 in comparison with that of two years previous or 
 the one which occurred seven years later. 
 
 Towards the end of the year 1860, when the 
 Bank of France was in need of gold, an accommo- 
 dation transaction took place between that institu- 
 tion and the Bank of England, by means of which 
 the transfer was made with as little disturbance 
 of the rate of exchange as possible. The matter
 
 THE BANK OF ENGLAND 201 
 
 was arranged in this way. The Bank of France 
 drew upon Messrs. Kothschild & Sons and Messrs. 
 Baring Brothers & Co. for bills amounting to 
 £2,000,000 at three months' date, and those bills 
 were neg;otiated in Paris and London without 
 forcing the rate of exchange to such a point as 
 would attract gold from London. 
 
 The reader of these "Chronicles" will remember 
 that at nearly every renewal of the Bank Charter 
 the proprietors have been called upon to pay for 
 their privileges by making some concession or 
 granting some loan free of interest to the Govern- 
 ment. Perhaps this is as it should be on the " give 
 and take " principle ; although some writers seem 
 to have thought otherwise. However, Mr. Gladstone 
 took a new departure when, on the 31st January, 
 1861, he addressed a long letter to the Governor 
 and Deputy Governor of the Bank on the subject 
 of the management of the National Debt, in which 
 he proposed a reduction in the sum paid by the 
 Government to the Bank for the work undertaken 
 by the latter. As the letter is a long one, consisting 
 of some fifteen hundred words, and not capable 
 of effective abbreviation, we will in this place 
 content ourselves with one sentence. Mr. Gladstone
 
 202 1857-I863 
 
 wrote, " We propose to ask Parliament to enact that 
 a new plan shall take effect from the commencement 
 of the next financial year, and shall remain in force 
 for twenty-five years certain." 
 
 On the 7tli February a Court of the proprietors 
 was held in the Bank parlour, at which the subject 
 of Mr. Gladstone's letter was considered, and the 
 resolution to accept the proposals of the Government 
 was adopted. Mr. Bonamy Dobree, the Governor, 
 stated that the price proposed to be paid by Mr. 
 Gladstone was £300 per million for the first six 
 hundred millions, and £150 on the surplus above 
 that amount, instead of £340 and £300 per million 
 which they had been hitherto receiving. The total 
 sum that would have to be given up as a result 
 of this arrangement would be £50,021. 
 
 The directors, it is believed, have always given 
 the clerks of the Bank such remuneration as they 
 thought sufficient to maintain themselves respectably, 
 and have ever shown a willingness to help them in 
 times of exceptional difficulty ; l^ut they have always 
 strongly objected to their getting involved in debt, 
 or to their putting their names to bills or promissory 
 notes. Towards the end of 1861 it came to the 
 knowledge of the directors that some of the clerks
 
 THE BANK OF ENGLAND 
 
 were in circumstances of embarrassment. In con- 
 sequence the Governor and Deputy Governor issued 
 a notice desiring those concerned to make known 
 their needs, and stating that they would receive 
 such assistance as the directors thought necessary. 
 Several clerks availed themselves of the assistance 
 so generously offered. Others who declined to make 
 the statement required were found to have been 
 dealing in bills and were immediately discharged, 
 in accordance with a strict rule to that effect which 
 has been in existence for many years. This rule 
 will be considered a wise and merciful one when 
 it is remembered that the exorbitant interest of 
 60 per cent, per annum and upwards is often, if not 
 generally, charged by the money lenders. 
 
 During this year the discontent which prevailed 
 in some quarters with the existing arrangements 
 between the Government and the Bank found 
 expression in a petition to Parliament signed by 
 some influential firms in the City, and presented 
 by the President of the Board of Trade on August 
 6th. After taking objection to fluctuations in the 
 value of money, the wording proceeds, " Your 
 petitioners believe and submit that these fluctuations 
 are the direct and inevitable result of the futile
 
 204 1 857- 1 863 
 
 and vicious attempts by legislative measures to 
 erect a fictitious system of currency on a false 
 basis." 
 
 1862 was the year of the great Exhibition. The 
 directors generously defrayed the expenses of the 
 clerks, so as to enable each one to pay some half- 
 dozen visits to the great show of the world's in- 
 dustry. 
 
 It was in 1855 that Mr. Smee explained to 
 the Society of Arts the extreme care which was 
 taken to prevent even a single sheet of bank-note 
 paper being feloniously abstracted from the Bank 
 Paper Mills. It was in August, 1862, that the 
 exciting news spread in commercial circles that 
 a large quantity of paper specially manufactured 
 for Bank of England notes had been stolen from 
 Messrs. Portal's mills at Laverstoke, in Hamp- 
 shire ; and not only had the paper been stolen, 
 but it had been used for the printing of forged 
 notes. 
 
 On August 22nd the Bank issued a notice offering- 
 rewards of £500 for the apprehension and convic- 
 tion of the thieves and £1000 for the apprehension 
 of the forgers, and also cautioning the public 
 against receiving the forged notes, and " not to
 
 THn BANK OF ENGLAND 
 
 depend upon the apparent genuineness of tlie paper 
 alone." 
 
 Experience teaches us that the greatest precautions 
 that can be taken give no absolute security against 
 fraud and robbery, and it also teaches that crime, 
 however cleverly planned, carried out and concealed, 
 is more likely than not to be discovered and 
 punished. It was so in the bank-paper robbery 
 case. 
 
 On October 28th two men, a butcher and an 
 electro - plater, were charged at the Mansion 
 House with beino; connected with others in steal- 
 ing bank-note paper and forging and uttering the 
 same ; and on the same day a man was charged 
 at Birmingham with being concerned in the 
 robbery. All were remanded, and the police 
 were successful in recovering a large quantity 
 of the forged notes. In November the prisoners 
 w^ere again examined and were committed for 
 trial. 
 
 On January 6th, 1863, four men named 
 Griffiths, Buncher, Burnett, and Williams, were 
 tried and found guilty. It was proved at the 
 trial that a duplicate of the master key had been 
 made in London from a cast obtained from an
 
 2o6 1857- 1863 
 
 employee at the mills, and Buncher had bribed a 
 boy to give him bank paper. Griffiths, an old 
 offender, was sentenced to penal servitude for 
 life ; Buncher to twenty-five years ; Burnett to 
 twenty years ; and Williams to four years — all 
 penal servitude.
 
 CHAPTER XV. 
 
 1864-1874. 
 
 The Bank joins tlie Clearing House — Pressure and speculation in 
 Limited Companies — Overend, Gurney, & Co., Limited — Note 
 circulation increased^Crisis — Bank failures — Failure of Overend's 
 Company — Black Friday — Application to Government — Correspon- 
 dence between the Bank and the Government — Suspension of the 
 Bank Charter Act — Effects of the jmnic — Prosecution of the 
 Overend Directors — Acquittal — Ojsinion of the Lord Chief Justice 
 — Plentiful gold — War on the Continent — Bank Holidays Act — 
 Effects of the peace — Fluctuations in the Bank rate — Exhibition of 
 bank-note paper — Forged bills at the Western Branch — How the 
 frauds were accomplished — Detection — Colonel Francis defended— 
 Trial and conviction of forgers — The Governor on the roljberies. 
 
 UP to the commencement of the year 1864 the 
 Bank of England used to cash their bills and 
 cheques by sending round to the various City banking 
 houses their clerks called " Out Tellers," who brought 
 back the effects either in notes and coin, in " bankers' 
 payments," or in drafts on the Private Drawing 
 Office. In May, 1864, they dropped this old- 
 fashioned method and passed their cheques, etc., 
 through the Clearing House from that date, thus 
 
 207
 
 2o8 1864- 1874 
 
 effecting a considerable saving of time and labour. 
 During this year there was great pressure on the 
 money market ; if not a crisis in itself, it may 
 almost be considered the commencement of the 
 crisis which reached its climax in 1866. It was 
 caused by over speculation in new companies which 
 were formed under the Limited Liability Act of 
 1862. From September to March 263 companies 
 were formed, with a nominal capital of over 
 £78,000,000. Of these new companies twenty- 
 seven were banking and fifteen discount companies. 
 The demands on the Bank of England caused the 
 rate to go up till it reached 9 per cent., Ijut towards 
 the end of the year it was reduced to 7 per cent. 
 Anyone looking in at the banking-house of 
 Messrs. Barclay, Be van & Co., in Lombard Street, 
 on certain days in the sj)ring of 1865 might have 
 observed that managers and clerks were unusually 
 busj''. They were engaged in business connected 
 with receiving subscriptions to the shares of a 
 new company ; the business of the great discount 
 establishment of Overend, Gurney & Co. had 
 been transferred to a Joint-Stock Company called 
 Overend, Gurney & Co., Limited. No shadow 
 of the coming event seemed to be cast before, for,
 
 THE BANK OF ENGLAND 209 
 
 as The Times said, " Shareholders and customers 
 relied with equal confidence in the solvency and 
 prosperity of the undertaking." One year only 
 did the new company live. 
 
 Through the lapsing of country note circulation 
 the note circulation of the Bank of England was 
 again increased in 1866 by £350,000, which raised 
 the total to fifteen millions. 
 
 The most memorable event of this year was the 
 commercial crisis. "During the early part of the 
 year a high rate of interest indicated unusual 
 pressure ; but it was commonly asserted that trade 
 was healthy, and the failure of one or two country 
 banks was attributed to local causes." ^ But in the 
 beginning of the year a large number of the recently 
 formed limited companies were day after day being 
 wound up. The first stoppage which created serious 
 alarm was that of the Joint-Stock Discount Com- 
 ]3any. The failure in April of Barnard's Bank in 
 Liverpool for the large sum of three and a half 
 millions converted the alarm into panic. 
 
 The pressure on the Bank of England was great 
 and of increasing intensity. In April the Bank 
 rate was 6 per cent. It was raised successively 
 
 ^ The Times.
 
 210 1 864-1 §74 
 
 to 7, 8, and 9 per cent, and finally to 10 per cent. 
 On the night of the 11th May the Chancellor of the 
 Exchequer stated in the House, that " We find the 
 Bank, through a desire to extend relief, had raised 
 its loans and discounts to-day to a sum of some- 
 thing more than £4,000,000. The effect of that 
 large accommodation was to reduce the reserve 
 of the Bank to under £3,000,000." And he said 
 also, that " If the Bank should in its issues exceed 
 the limit allowed by law, the Ministers would 
 make immediate application to Parliament for its 
 sanction." 
 
 On the 10 til May, Overend, Gurney & Co, made 
 application to the Bank for assistance to the extent 
 of £400,000. Their statement of their case not 
 being considered satisfactory their application was 
 refused, and about half-past three o'clock the great 
 house of Lombard Street closed its doors. The 
 failure was not announced till after banking hours, 
 and the effect, which has been likened to that 
 of an earthquake, it is impossible adequately to 
 describe. The Times said : 
 
 " At the time of the suspension the engagements of the 
 company amounted to £19,000,000, and traders and specu- 
 lators depended on its resources for a proportionate supply
 
 THE BANK OF ENGLAND 
 
 of accommodation. No single bankruptcy has ever caused 
 so great a shock to credit. The following day produced the 
 greatest agitation which has ever been known in the City, 
 and the Government was compelled, as in 1847 and 1857, to 
 authorize the Bank of England to issue notes beyond the 
 legal limit. It was rumoured that the strongest Joint-Stock 
 Banks were almost drained of their ready money, nor can 
 it be doubted that a slight increase of distrust on the part 
 of the depositors might have produced mischievous results. 
 Two or three banks, including the Agra and Masterman's 
 Limited Company, failed within the week, and several of 
 the new Credit Companies, framed on the French model, 
 were summarily crushed. The rate of 10 per cent, discount 
 imposed on the Bank of England by Government as a 
 condition of the additional power of issue lasted from 
 May 11th to August 17th." 
 
 The next day, Friday, has been designated Black 
 Friday. When the news of Overend's stoppage 
 was generally known, the excitement in the City 
 was intense, and the crowds which assembled in 
 Lombard Street rendered that thoroughfare im- 
 passable. No one was considered safe ; there was 
 a run on all the banks, and probably some of them 
 would have broken if the Government had not 
 stepped in in time to mitigate the pressure. The 
 country banks hurried to withdraw their l)alances 
 deposited in London, and, of course, the appli-
 
 212 1864-1874 
 
 cations to the Bank of England for assistance in the 
 form of discounts or advances were numerous. It was 
 decided to make aj^plication for help to the Govern- 
 ment, as a journal of the day said, "Not on the part 
 of the Bank, but on the part of the public." 
 
 Some of the leading people of the City resolved 
 to apply to the Government for an immediate 
 relaxation of the Bank Charter, and accordingly 
 a very influential deputation of some of the 
 principal merchants and bankers waited upon the 
 Chancellor of the Exchequer in the evening, and 
 at a late hour of the night the announcement 
 already quoted was made by Mr. Gladstone in the 
 House of Commons. The decision of the Ministers 
 was received with unbounded satisfaction. 
 
 The correspondence which passed between the Bank 
 and the Ministers we now give in a condensed form. 
 
 "Bank of England, llth May, 1866. 
 
 " Sir, — We consider it to be our duty to lay before the 
 Government the facts relating to the extraordinary demands 
 for assistance which have been made upon the Bank of 
 England to-day, in consequence of the failure of Messrs. 
 Overend, Gurney & Co. 
 
 "We have advanced to the bankers, bill brokers, and 
 merchants in London, during the day, upwards of four 
 millions sterling, upon the security of Government Stock
 
 THE BANK OF ENGLAND 213 
 
 and bills of exchange — an unprecedented sum to lend in one 
 day, and which, therefore, we suppose would be sufficient to 
 meet all their requirements, although the proportion of this 
 sum which may have been sent to the country must 
 materially affect the question. 
 
 " We commenced this morning with a reserve of 
 £5,727,000, which has been drawn upon so largely that 
 we cannot calculate upon having so much as £3,000,000 this 
 evening, making a fair allowance for what may be remaining 
 at the branches. 
 
 " We have not refused any legitimate application for 
 assistance, and unless the money taken from the Bank 
 is entirely withdrawn from circulation, there is no reason to 
 suppose that the reserve is insufficient. 
 
 " We have the honour to be, Sir, 
 
 " Your obedient servants, 
 
 (Signed) "H. L. Holland, 6^0 wrwor. 
 
 "Thos. Newman Hv^t, Deputy Governor. 
 
 " The Right Hon. the Chancellor of 
 
 the Exchequer, m.p., &c., &c., &c." 
 
 To the above communication a reply was sent 
 to the following effect : 
 
 " To the Governor and Deputy Governor of 
 the Bank of England. 
 " Gentlemen, 
 
 " The accounts and representations which have reached 
 Her Majesty's Government during the day exhibit the state 
 of things in the City as one of extraordinary distress and
 
 2t4 1 864- 1 874 
 
 apprehension. Indeed, deputations composed of persons of 
 the greatest weight and influence, and representing alike the 
 private and joint-stock banks of London, have presented 
 themselves in Downing Street, and have urged with 
 unanimity and with earnestness the necessity of some 
 intervention on the part of the State to allay the anxiety 
 which prevails, and which appears to have amounted, 
 through the great part of the day, to absolute panic." 
 
 The letter goes on to contrast the panic with 
 the previous ones of 1847 and 1857, authorizes the 
 directors to issue notes in excess of the limit 
 prescribed by the Act of 1844, and states that 
 the interest to be charged should be 10 per cent. 
 
 It concludes : 
 
 " We have the honour, etc., 
 (Signed) " Eussell. 
 
 "W. E. Gladstone. 
 
 " Downing Street, May llfh, 1866." 
 
 When this measure of relief was granted the 
 panic was over and money began to get cheaper, 
 till in June, 1867, the Bank rate w^as down to 2j 
 per cent. But the effects of the tremendous shock 
 to credit were felt for years. At the end of 1866 
 we find on the authority of The Times that 
 " commerce and credit have not displayed their 
 wonted elasticity in recovering from the disasters
 
 THE BANK OF ENGLAND 215 
 
 of 1866. A rate of discount rano-ino- from one 
 to two per cent, has failed to stimulate enterprise ; 
 and the fresh disclosures of irregularity and un- 
 soundness in the affairs of railways and other 
 joint-stock undertakings have discouraged invest- 
 ment. The embarrassments of the Brighton, of 
 the North British, of the Great Eastern, of the 
 Great Western, and, above all, of the London, 
 Chatham, and Dover, and the doul)ts which have 
 arisen as to the financial condition of the Caledonian 
 Railway, press heavily on the credit of the most 
 prudent and prosperous companies. The recent 
 failure of the Royal Bank of Liverpool has 
 once more illustrated the peculiar risks of banks 
 administered by traders, whose interest in oljtaining 
 undue accommodation is likely to prevail over their 
 regard for the protection of their shareholders." 
 And again at the close of 1869 the same journal 
 said, " Although more than three years have now 
 elapsed since the great commercial and financial 
 shock of 1866, there has been no healthy revival 
 of trade." 
 
 The litigation which followed the fall of the 
 Lombard Street house was very extensive. Twu 
 scenes only are necessary to complete our narrative 
 
 Q
 
 2i6 1864-1874 
 
 of that event. On the 1st January, 1869, at the 
 Mansion House, Messrs. H. E. Gurney, Robert 
 Birkbeck, H. G. Gordon, William Rennie, H. F. 
 Barclay, and J. H. Gurney, were charged, as 
 directors of Overend, Gurney & Co., Limited, with 
 "unlawfully and wilfully conspiring," etc., to "cheat 
 and defraud " the prosecutors of a large sum of 
 money. All the six prisoners were committed for 
 trial and were liberated on ])ail. When the decision 
 of the magistrate was given, loud cheers rang 
 through the court, were taken up by the crowd 
 which was assembled outside, and the applause of 
 the crowd was answered by renewed cheering in 
 the court. 
 
 The trial of the case, the Queen v. Gurney and 
 others, commenced in the Court of the Queen's 
 Bench, in the Guildhall, on the 13th December. 
 It occupied nine days, and terminated in a verdict 
 of "Not Guilty." Public opinion in reference to 
 the matter had undergone a change during the 
 year, for the cheers of the people were as loud 
 and as long on the acquittal of the directors as 
 when they were committed for trial. Dr. Kenealy, 
 the counsel for the prosecution, applied for costs, 
 when the Lord Chief Justice replied, "If the
 
 THE BANK OF ENGLAND 217 
 
 prosecution had only included the old directors, 
 then, notwithstanding the verdict which has just 
 been pronounced, and in which I must say I fully 
 concur, I should have been disposed to accede to 
 the application, thinking the case was, as regards 
 them, one fit for inquiry." The application was 
 refused. 
 
 An event in the annals of the Bank took 
 place in 1870, in the passing of the Act 33 Vict. 
 Clause 72 of that Act granted the perpetuity of 
 the Bank's Charter. 
 
 The month of December was distino-uished for 
 
 o 
 
 a plethora of gold. The Bank rate was down to 
 2 J per cent., and the notes in circulation did 
 not amount to the sum of £2,000,000 more than 
 the bullion in the vaults. 
 
 The great war which commenced in July between 
 France and Germany did not remarkably affect the 
 Bank. On the outbreak of the war the Bank rate 
 was raised to 6 per cent., but it was soon after- 
 wards reduced, and at the close of the year the 
 condition of trade was, as a whole, fairly prosperous. 
 
 In 1871, on the 25th May, the passing of Sir 
 John Lubbock's Bank Holidays Bill gave the banks 
 of the country four additional holidays every year,
 
 2i8 1864-1874 
 
 viz., Easter and Whit Mondays, the first Monday 
 in August, and Boxing Day. They did not prove 
 to be a special boon to Bank clerks or to bankers' 
 clerks, as the holidays were soon adopted by all 
 classes, and came to be regarded as much public 
 holidays as Christmas Day and Good Friday had 
 previously been. 
 
 In 1871 the terrible war on the Continent was 
 over, and in the following year the effects of the 
 treaty of peace affected the money market in 
 England more than the war had done. Of the 
 vast sums of money which were paid, under 
 the treaty of 1871, by France to Germany, "a 
 large portion had been retained in the hands of 
 the Government and of private speculators, in 
 anticipation of the proposed substitution of gold 
 for silver in the currency of the empire. "^ The 
 directors of the Bank found it necessary to take 
 precautions to guard against the risk of a sudden 
 drain of bullion. In April the Bank rate was 
 raised from 2^ to 3 J per cent., and it remained 
 at the latter price or at 4 per cent, till August. 
 In the autumn, in the course of five or six weeks, 
 it was raised by successive stages to 9 per cent., 
 
 ^ The Times.
 
 THE BANK OF ENGLAND 
 
 219 
 
 at which figure it remained from the 5th to the 
 19th November; that high rate of interest had 
 the result of attracting gold to the English markets, 
 so that in Deceml)er the directors were able to 
 reduce the rate to 5 per cent. 
 
 During this year specimens of bank-note paper 
 were to be seen at the International Exhibition 
 at South Kensington. One sheet, set in a frame, 
 showing various kinds of watermarks, was said 
 to have cost Messrs. Portal the sum of £500. 
 Russia also exhibited bank-note paper. 
 
 In 1873 it was discovered that the Bank had 
 been defrauded of a large sum of money l)y means 
 of forged bills, which were sent into the Western 
 Branch for discount. The frauds were committed by 
 the exercise of great skill and patience by well- 
 educated men, some of whom could speak several 
 languages, and wdio might have been benefactors 
 of society if their talents had been turned to good 
 instead of evil account. The principal actors in 
 the business were three Americans and a man 
 named Noyes. In the spring of 1872 the 
 Americans, George Bidwell, Austin Biron Bidwell, 
 and George Macdonnell, arrived in London with 
 their plans well matured, and with a capital to work
 
 220 1864-1874 
 
 with of some six or eight thousand pounds. Those 
 plans were boklly and cleverly executed, and were 
 only prevented from lieing successfully and com- 
 pletely carried out by the occurrence of one of 
 those little errors which, fortunately for honest 
 and law-abiding citizens, are so often made by the 
 rogues and scoundrels who prey upon them. 
 
 In the month of April Austin Bidwell, Macdonnell, 
 and a companion named Siebert went to the shop of 
 Mr. Green, a tailor in Savile Row, ordered some 
 clothes, and said they would call to try them on 
 later. They did so on May the 4th, when Bidwell, 
 who had given the name of Warren, said they 
 wanted to catch the Irish express, and requested 
 Mr. Green to take care of £2000 which he did not 
 like to leave at his lodgings. Mr. Green, instead 
 of accepting the responsibility of the money, took 
 Mr. "Warren, as he was called, to the Western Branch 
 in Burlington Gardens, where he kept his account, 
 and gave his new customer an introduction to the 
 authorities there. 
 
 An important step in carrying out the conspiracy 
 was now accomplished. Bidwell was a customer 
 of the Bank, and he soon took care to improve his 
 position and to introduce his confederates. Noyes,
 
 THE BANK OF ENGLAND 
 
 who gave as his address an hotel near Manchester 
 Square, afterwards took many of the forged docu- 
 ments to the Bank. The "deposit" account was 
 converted into a " drawing " and " discount " account, 
 and as an explanation why large sums w^ould be 
 placed to their credit, the conspirators informed 
 Colonel Francis, the agent (or as he would be called 
 in a Joint-Stock Bank, the manager), that they were 
 bringing out an improved railway brake and were 
 about to establish a sleeping-car manufactory in 
 Birmingham. Colonel Francis was afterwards 
 blamed in some quarters for having been too con- 
 fiding and for not making sufficient inquiries about 
 his new customers. 
 
 The next step was to obtain first-class bills which 
 were to be counterfeited, and from which plates, 
 dies, etc., were afterwards designed. One of the 
 Bid wells went to Amsterdam and bought bills on 
 Montagu & Co., Blydenstein & Co., and the London 
 and Westminster Bank ; he then went to Paris and 
 obtained bills on Eothschilds, and on Barings of 
 London. He returned to London, and on the 17th 
 January he took the Eothschild l^ill to the Western 
 Branch for discount, saying, as lie handed it in, 
 "There, I suppose that is good enough for you."
 
 222 1864 -1874 
 
 He afterwards offered for discount altered and forged 
 bills, the whole amounting to more than £100,000. 
 As soon as the proceeds were placed to account they 
 were drawn off and so invested as to be easily 
 available so soon as the forgers were ready to make 
 off with their booty. 
 
 That time had nearly come, but the frauds were 
 discovered by means of the very last parcel of bills 
 that were handed in to the Bank on the 27th 
 February. Most of the bills discounted were entire 
 forgeries, but one good bill for £25 had been altered 
 to £2500. The first of the forged acceptances would 
 not become due till the 31st March, which allowed 
 the conspirators plenty of time to escape from the 
 country. But their plans were upset by a trifling 
 omission. 
 
 Two Ijills, among those last handed to the 
 Bank, for £1000 each on Blydenstein & Co., and 
 payable at " three months after sight," did not 
 bear the date of the " sighting," which is essential. 
 The clerk who had the bills to examine thought that 
 was merely a clerical error, and sent the two bills 
 to Messrs. Blydenstein to have it rectified ; it was 
 then discovered that the bills were forgeries. When 
 the thieves found that their game was up they
 
 THE BANK OF ENGLAND 223 
 
 bolted. The police followed them half over the 
 globe, and at last they were brought to justice. 
 
 At the half-yearly general court of the proprietors 
 held at the Bank on the 13th March, Mr. George 
 Lyall, the Governor, made the following observations 
 in regard to what had recently transpired : 
 
 " I may state, with regard to Colonel Francis, our agent 
 at the Western Branch, that although he was named a 
 Colonel, being, in fact, a Colonel of engineers in the Indian 
 army, he had been engaged in civil work under the Govern- 
 ment in respect to accounts. On his being introduced to 
 the management he had been first appointed to Leeds as 
 sub-agent, whence he had been removed to our Western 
 Branch as chief agent. During his period of service that 
 gentleman had given great satisfaction, and though through 
 the extraordinary ingenuity in the manufacture of those bills 
 he had involved the Bank in a serious loss, I cannot see that 
 any blame is to be attached to his conduct." 
 
 In April it was announced that all the perpetrators 
 of the late forgeries had been arrested. In August 
 they were tried, convicted, and sentenced to penal 
 servitude for life. 
 
 At the half-yearly meeting held at the Bank on 
 the 12th March, 1874, the Governor, Mr. Benjamin 
 Buck Greene, is reported to have said, in reference 
 to the robberies :
 
 224 1 864- 1 8/4 
 
 " At that time last year we wrote off £77,000, which was 
 the total loss. He was happy to be able to inform the 
 proprietors that since that time the Bank had recovered 
 property which had realized £73,420 13s. 2>d., leaving a total 
 loss of £3,579 6s. M. But the money had been recovered 
 at a considerable cost, the Bank having pursued its usual 
 policy of leaving no stone unturned to bring offenders to 
 justice, to punish them, and to recover as much of the lost 
 property as possible. A large sum of money was necessarily 
 expended in tracing and discovering the property and in 
 givino; rewards for services. The extradition of one of the 
 culprits from New York, and another from Havannah, of 
 course entailed expense, but it was a public duty to track 
 the wrongdoer and punish him. The total cost of the 
 prosecution, etc., amounted to £46,419 Os. 9c?., which, 
 deducted from the £73,420 odd received, left a balance 
 of £27,001 12s. 6f/., which had been carried to profit and 
 loss account of the half-year, and was included in the ' rest ' 
 reported that day."
 
 CHAPTER XVI. 
 
 1880-1886 
 
 Quiet times — Bank meeting— Bimetallism — The Paris Conference — 
 Attitude of the Bank — Extent of the Bank's work — An imusual 
 meeting — Address to the Queen — Subscriptions of the Bank to 
 various funds — The Directors' pay increased — Suifell v. Bank — 
 Gattie v. Bank— Gattie v. Grenfell — National Debt Conversion Act 
 — Kemarkable discovery of forged notes — Saturday early closing. 
 
 IT has been said, " Happy is the nation which 
 has no history." Perhaps this saying may be 
 applied to the Bank during those periods when 
 things proceed so quietly and with such regularity 
 that there is not much to be said about them. 
 If there are no stirring incidents to record of the 
 few years following 1872, we may be consoled by 
 the reflection that the Bank went on safely and 
 evenly, doing its business with the public and the 
 Government, and that during such times there are 
 no commercial panics and gigantic failures to bring 
 misfortune and ruin to thousands. The following 
 condensed report of a meeting of the proprietors 
 
 225
 
 226 i88o-i886 
 
 will give the reader an idea of the kind of meetings 
 that take place in the Bank parlour twice a year. 
 
 A General Court of the Governor and Company 
 of the Bank of England was held on March 11th, 
 1880, in the Bank parlour, "to consider of a 
 dividend." 
 
 Mr. J. W. Birch, the Governor, presided. After 
 the minutes were read, etc., the Governor said 
 he had to acquaint the court that the net profits 
 for the half-year ending February 29th last were 
 £681,714, making the amount of "rest" on that 
 day £3,703,332, and after providing a dividend of 
 4f per cent., the " rest " would be £3,012,065. The 
 Court of Directors therefore proposed a half-year's 
 dividend of interest and profits, to be made on 
 April 5th next, of £4 155. per cent., without 
 deduction on account of income-tax. 
 
 Mr. W. Botley seconded the motion, and referred 
 to the great frequency of late of forgeries and 
 alterations of cheques. He expressed his opinion 
 that by a combination of the printer, artist, and 
 chemist, an alteration of a cheque might be rendered 
 impossible. 
 
 The Governor, in reply, said : As to the cheques, 
 for the past twelve months he had been in constant
 
 THE BANK OF ENGLAND 227 
 
 communication with Mr. Coe^ and other people 
 conversant with the subject, as to the best system 
 to baffle every attempt at forgery. He believed 
 now that they had a cheque which would do that. 
 He did not think it was quite ready yet, but it 
 would be in a few days. He thought they had 
 been very fortunate in making so few losses. After 
 a vote of thanks to the Governor and directors was 
 carried, the court adjourned. 
 
 The great fall in the value of silver, consequent, 
 partly, on the adoption of a gold standard by 
 Germany, France, and the United States, caused 
 great stir about this time among bimetallists, and 
 brought their views somewhat into prominence. Mr. 
 H. H. Gibbs and Mr. H. K. Grenfell, both directors 
 of the Bank of England, took part in the con- 
 troversy, on different occasions, on the side of 
 bimetallism. In 1881 a Monetary Conference was 
 held in Paris, to which France, Germany, the 
 United States, Canada, India, Eussia, Austria, 
 Hungary, Greece, Sweden, Norway, Switzerland, 
 Portugal, Denmark, and Great Britain all sent 
 delegates. No definite conclusion was arrived at, 
 and the Conference adjourned to April, 1882. The 
 
 ^ The Bank printer.
 
 228 i88o-i886 
 
 position held by tlie Bank of England in regard 
 
 to the silver question was explained by Professor 
 
 Leone Levi, in the Gilbart lecture which he delivered 
 
 at King's College in 1882. In regard to the Paris 
 
 Monetary Conference he said : 
 
 "It having been suggested that the opinion of the 
 principal banks of issue on the subject should be ascer- 
 tained, the British representatives communicated to the 
 Conference a memorandum by the P)ank of England to the 
 effect that : ' Inasmuch as the Bank Charter Act permits the 
 issue of notes upon silver to the extent of the fourth part 
 of the gold held Ijy the Bank in the issue department, in 
 the event of the mints of other countries making such rules 
 as would ensure the certainty of conversion of gold into 
 silver and silver into gold, the Bank Court were satisfied 
 that the issue of their notes against silver, within the letter 
 of the Act, would not involve the risk of infringing that 
 principle of it which imposes a positive obligation on the 
 Bank to receive gold in exchange for notes, and to pay notes 
 in gold on demand. The Bank Court saw no reason why an 
 assurance should not be conveyed to the Monetary Con- 
 ference at Paris that the Bank of England, agreeably with 
 the Act of 1844, would be always open to the purchase of 
 silver under the conditions above described.' Here, the 
 Conference thought, was sometliing tangible. Let Germany 
 engage not to sell any more silver for a certain time, let the 
 Bank of England keep a larger quantity of that metal than 
 heretofore, and let British India undertake not to depart in 
 any direction calculated to lower the value of silver from
 
 THE BANK OF ENGLAND 229 
 
 the existing practice of coining silver, a legal tender through- 
 out the Indian dominion of Her Majesty, and the downward 
 course of the price of silver may he so far arrested." 
 
 Mr. J. W. Birch, the Governor of the Bank in 1881, 
 speaking at a dinner at the Mansion House, said, 
 in allusion to the work which was done at the Bank, 
 " Some idea of the magnitude of this work may 
 be formed when I tell you that there are no less than 
 236,500 accounts opened in the public funds ; that 
 the number of bank-notes issued during the last 
 year was above fifteen and a quarter millions, repre- 
 senting a sum of £338,000,000, and a similar amount 
 cancelled ; an accurate register of each operation 
 being kept, so that any note paid into the Bank 
 during the last five years could be produced within 
 a minute or two with information as to the channel 
 through which it had found its way to the Bank, 
 although the register represents 77,000,000 of notes 
 stowed away in 14,500 boxes. It is generally 
 thoug;ht that the Bank is extravagant in cancellinsr 
 the notes which come in, but the matter has been 
 well considered, and it is calculated that if we had 
 to keep a registry of the notes in the way it is the 
 custom of the Bank to do, the system we follow 
 is the cheapest." 
 
 R
 
 230 i88o-i886 
 
 At the General Court held at the Bank on March 
 16th, 1882, several matters somewhat out of the 
 usual routine were discussed. Besides the considera- 
 tion of a dividend the Court had also to consider 
 an address of congratulation to the Queen on Her 
 Majesty's recent providential escape from assassin- 
 ation. Mr. H. R. Grenfell, the Governor, occupied 
 the chair. During the meeting Mr. Wren said he 
 saw in the papers at the beginning of the year 
 that the Governor of the Bank attended a meeting 
 at the Mansion House on behalf of a fund for the 
 protection of life in Ireland ; and he appeared 
 to have attended it as Governor of the Bank of 
 Eno;land, and not as Mr. Grenfell. He thought 
 it objectionable that the Governor of the Bank 
 of England should take part in a political move- 
 ment ; and he wrote a letter to him asking him 
 by what authority he gave away the proprietors' 
 money without their being consulted. He now, 
 therefore, asked the Governor and directors whence 
 they derived their authority to subscribe, and he 
 moved, " That this Court disapproves of any sub- 
 scription by the Bank to any fund which indicates 
 a political bias." Mr. Jones seconded the motion. 
 
 In reply, the Chairman said he was perfectly
 
 THE RANK OF ENGLAND 231 
 
 certain that those who started the fund had no 
 political bias whatever, and he had served on the 
 committee for the purpose of keeping them up 
 to that. AVith regard to the ^^owers which the 
 directors had for the purposes of these subscriptions, 
 he could only say that they had always made these 
 subscriptions at different times and periods, and that 
 they had not been wholly confined to objects for 
 charity. At all times when there had been any 
 great public movements on foot it had been the 
 practice to call on the Bank of England for their 
 subscriptions, and they had been given on various 
 occasions. According to their Statutes or Charter 
 the Court of Directors were enabled to do anything 
 whatever which the Court of Proprietors might do ; 
 and it was somewhat sinoular that the first sub- 
 scription which he could find in the books was 
 made by the Court of Proprietors, not by the Court 
 of Directors. It was a subscription of a thousand 
 guineas, in 1743, to a fund for the relief, support, 
 and encouragement of His Majesty's forces. In 
 1797 the directors subscribed five hundred guineas 
 for detecting the persons engaged in the mutiny 
 of the Nore, and in 1815 there were various sub- 
 scriptions to the Patriotic Fund and other funds
 
 232 i88o-i886 
 
 connected with the war then raging in Europe. 
 From 1815 down to the Crimean War there were 
 various subscriptions — almost all for charitable 
 objects ; and since then some in connection with 
 the mutiny in India, with the Bengal Famine Fund, 
 and various other matters more or less connected 
 with what some persons might suppose was the 
 work of the Government. 
 
 Sir John Lubbock suggested that after what had 
 fallen from the Governor the motion should be 
 withdrawn. Mr. Wren consented to that. 
 
 Sir John Lubbock gave notice of his intention 
 at the next meeting to move that the annual 
 allowance to the Governor and Court of Directors, 
 which was fixed in 1804 at £8000 a year, be raised 
 to £12,500. 
 
 At the adjourned meeting, held on March 29th, 
 the proposal to increase the remuneration to the 
 directors was amended, and the sum decided on 
 was fixed at £14,000 per annum, to be divided 
 as follows : £1000 each to the Governor and 
 Deputy Governor, and £500 to each of the directors. 
 
 A question of importance both to the Bank 
 and the public w^as decided after two trials in the 
 Courts of Law. Some person or persons obtained
 
 THE BANK OF ENGLAND 233 
 
 money from a London banker by means of a forged 
 cheque. The notes thus obtained were changed at 
 the Bank of England for other notes which were 
 put into circukation on the Continent, one of the 
 numbers of each note having been altered, doubtless 
 for the purpose of j^reventing the notes being traced. 
 Some of these notes came into the possession, in the 
 ordinary course of business, of a Monsieur SufFell, 
 a money-changer at Brussels. On payment being 
 refused by the Bank, M. SufFell, as a honci-Jide 
 holder of the notes, brought an action against the 
 Bank for the recovery of the money. The case was 
 tried before the Lord Chief Justice (Lord Coleridge) 
 on July 6th, 1881, who gave judgment in favour 
 of the plaintiff. Against this decision the defen- 
 dants appealed, and the case, Suffell v. The Bank 
 of England, was tried in the Court of Appeal at 
 Westminster on April 28th, 1882, the action 
 depending upon the question whether the notes 
 had been altered in a material particular. The 
 Court ruled that they had, and therefore reversed 
 the decision of the Court below and gave judgment 
 in favour of the Bank. The Master of the Rolls, 
 in giving judgment, said: "The usage of putting 
 numbers on notes dated from a very long period
 
 234 i88o-i886 
 
 and was a custom well known. The Statute 7 & 8 
 Vict. c. 32, s. 4, gave the right to demand notes 
 in exchange for gold bullion ; it also enabled persons 
 who received notes to trace them by reference to 
 their numbers, and led to the detection of crime 
 if the notes were stolen. The utility of the 
 numbers did not stop there. It enabled the Bank 
 to know the extent of its issue and the amount 
 of its liability. . . . This was clearly a case within 
 the general law ; there was no authority binding 
 on this Court to limit the meaning of ' material 
 alteration ' so as to exclude the case from the general 
 law. The decision would be productive of hardship 
 to the plaintiff, but nevertheless the defendants 
 ought to succeed." Lord Justices Brett and Cotton 
 also delivered judgments to the same effect. 
 
 Another action was brought against the Bank in 
 the year 1882. On March 20th the case of Gattie 
 V. The Governor and Company of the Bank of 
 England was tried before Mr. Justice Field and a 
 special jury. The plaintiff had been a clerk in 
 the employ of the Bank for thirty-four years. In 
 1878 he had been engaged in some stock and share 
 dealings with a Mr. Keymer, who forged a receipt 
 purporting to have come from the Bank of England,
 
 THE BANK OF ENGLAND 235 
 
 for which offence he was afterwards tried for forgery 
 and convicted. Mr. Gattie was dismissed on account 
 of his transactions with Keymer, and he brought 
 his action to recover damages for wrongful dismissal 
 and arrears of salary on the ground of his having 
 done nothing contrary to the Bank rules. 
 
 After a searching cross-examination of the plaintiff 
 by Mr. Webster, q.c, on behalf of the Bank, the 
 plaintiff's counsel, Mr. Kemp, said that after what 
 had come out it was evident there had been a breach 
 of the rules, and he would accept a verdict for the 
 defendants. The judge and the jury both agreed 
 to that view of the case, consequently judgment was 
 given for the Bank with costs. 
 
 At the next meeting of "General Court" of the 
 Bank, on March 15th, 1883, there was some dis- 
 position on the part of a few of the proprietors 
 to discuss the case of Mr. Gattie, but when Mr. 
 H. R. Grenfell, the Governor, said he confessed that 
 he should not like to make public the memorandum 
 on the subject which he held in his hand, unless he 
 were assured that Mr. Gattie desired it, the matter 
 was not pressed. 
 
 Two years afterwards an action, brought by Mr. 
 Gattie against Mr. Grenfell for slander, was tried in
 
 236 i88o-i886 
 
 the Court of Queen's Bench on May 3rcl, 1885. 
 The plaintiff based his charge on the words we have 
 already quoted, and also on the following, which the 
 plaintiff alleged that the defendant had used on the 
 same occasion : " The Bank officials can bring forward 
 proofs of Mr. Gattie's misconduct, making his dis- 
 charge necessary, and his friends would best consult 
 his feelings by letting the matter drop " ; but the 
 plaintiff did not succeed in proving that the latter 
 words had been spoken. The defendant pleaded 
 that the words he used were privileged, were true, 
 and were not spoken in malice. The judge ruled 
 that the occasion was privileged, but he allowed 
 the question of malice to go to the jury. The 
 jury decided that there was no evidence that Mr. 
 Grenfell had acted maliciously, so the plaintiff lost 
 his action on all points. 
 
 On July 3rd, 1884, the National Debt (Con- 
 version of Stock) Act was passed. The object was 
 to bring about the reduction of the interest payable 
 thereon through the voluntary action of the Stock 
 holders, although the Act gave the Government 
 compulsory power after giving a year's notice. 
 The terms offered were either £102 of a new 2f 
 per cent. Stock, or £108 of a 2 J per cent. Stock, for
 
 THE BANK OF ENGLAND zyj 
 
 every £100 of 3 per cent. Stock exclianged. The ex- 
 change in either case would involve a loss of income, 
 and whether there would be any real gain of capital 
 was a matter of uncertainty. The £102 at 2f per 
 cent, would yield £2 165. \d., and the £108 at 2 J 
 per cent. £2 14s. per annum. This was not an 
 enticing bait, and the public did not readily take 
 it. More than a month after the terms were 
 published a financial journal reported that " None 
 of the large holders of the British funds have up 
 to this time accepted the offers of the Chancellor 
 of the Exchequer for the conversion of their Stock." 
 At a General Court of the Bank held on March 
 12th, 1885, Mr. J. Jones, a proprietor (who generally 
 had a speech to make on such occasions), said : " The 
 directors had l)een very energetic in connection with 
 the conversion scheme of the Government, and he 
 had received some half-dozen intimations from them, 
 telling him that he could convert his holding from 
 3 per cent, to 2 J per cent." 
 
 In this year a number of counterfeit notes were 
 discovered in a remarkable manner. The authorities 
 had for some time been trying in vain to trace some 
 forged notes for large amounts which they knew to 
 be in circulation. Early in the month of January
 
 238 i88o-i886 
 
 a woman, accompanied by a respectable tradesman 
 of Leadenhall Market, presented a £500 note at 
 the Bank, for which she required change in other 
 notes and coin. The note tendered appeared per- 
 fectly genuine, but was discovered to l)e a forgery 
 by the fact that no genuine note for £500 of the 
 number on the one presented had been issued. 
 When the detectives were called in and the woman 
 c[uestioned, she at first declined to give any in- 
 formation. The tradesman, however, said that the 
 woman owed him money and had asked him to take 
 the amount of her debt out of the £500 note, and 
 he, not having sufficient cash to change it, came 
 over with her to the Bank. On the police pursuing 
 their inquiries the following facts came out. The 
 woman's husband, a shopkeeper in Mansell Street, 
 Whitechapel, said he had received the notes from 
 a friend in the country, and he handed to the 
 officers three or four similar notes and several 
 others for £100 each. On following the matter 
 U2"> from the addresses given, the notes were finally 
 traced to a man employed by the Metropolitan 
 Board of Works to keep clean the paths on 
 Clapham Common. The scavenger admitted having 
 had the notes, and stated that he and two of his
 
 THE ROTUNDA, BANK OF ENGLAND.
 
 THE BANK OF ENGLAND 239 
 
 companions had, towards the end of the previous 
 year, found a box hidden under a furze bush. On 
 opening it they found it to contain Bank of Enghmd 
 notes to the amount of £6000 or £7000, in de- 
 nominations of £100 and £500. The men ag-reed 
 to divide the find between them, but did not do 
 so at once lest the owner of the box should appear. 
 The police retained the whole of the forged notes. 
 
 The question of early closing in banks had come 
 under discussion at different periods. Up to the 
 year 1850, or thereabouts, London banks remained 
 open on Saturdays till five o'clock ; about that time 
 the hour was changed to four. Some years after- 
 wards, after hard fighting for two o'clock as the 
 closing time, a compromise resulted in the year 
 1865 in the hour being fixed at three o'clock. 
 In 1886 the early-closing advocates proposed that 
 one o'clock should be the closing time. The Bankers' 
 Committee took the matter under consideration, and 
 again a compromise was effected, and on Saturday, 
 October 2nd, 1886, the Bank of England, in common 
 with the other City bankers, closed at two o'clock. 
 
 Mr. Henry May, formerly a clerk in the Bank, 
 contributed the following particulars concerning the 
 Rotunda to the Bankers' Magazine of May, 1891.
 
 240 
 
 i88(>-i886 
 
 The Rotunda was formerly used for the Consol 
 Market by the Stock Exchange. A writer of that 
 time described what then took place there as " a 
 scene of bewildering confusion and uproar, made 
 by brokers and jobbers offering or bidding for stock, 
 proclaiming the news — false or otherwise — and 
 touting for business with the full force of their 
 lungs ; while beadles, from time to time, only added 
 to the noise in the vain attem23t to drown the voices 
 and to give the purchasers and sellers room and 
 opportunity to transact their business." As time 
 wore on things got better, no doubt, but the 
 custom of making a Stock Exchange of the Rotunda 
 was found to be such a nuisance that at last, in 
 1837, Sir Timothy Curtis, the then Governor, most 
 unceremoniously drove the intruders from the build- 
 ing, which is now the dividend pay office, where 
 stockbrokers who take their warrants in the dividend 
 office can have them paid in cash. A gallery has 
 recently been placed round the building.
 
 CHAPTER XVII. 
 
 1887-1891 
 
 Increase of Note Issue — Conversion of the National Debt — Mr. 
 Gosclien's Resolution — High pressure at the Bank — Sir Mark Collet 
 — High price of Bank Stock — Robbery by an Agent — Detection and 
 Flight — Opening of tlie Law Courts Branch — Ansivers' prize — Scene 
 at the Threadneedle Street entrance — Light gold called in — Gold- 
 weighing machines — Position of the Bank in regard to Interest on 
 Deposits— Bank of England Club — Ee Vagliano Bros.' appeal to the 
 House of Lords. 
 
 AN Order in Council emanated from " the Court 
 ■^^ at Balmoral, the 15th day of Sej^tember, 1887. 
 Present, the Queen's Most Excellent Majesty in 
 Council." By this Order the Bank received authority 
 to issue additional notes to the amount of £450,000. 
 This was done, as on former occasions, in accordance 
 with the Bank Act of 1844, which decreed that the 
 Bank might issue two-thirds of the amount of note 
 
 o 
 
 circulation which should lapse owing to the failure or 
 amalo;amation of other banks. The Bank retains no 
 profit from these additional issues on securities, as 
 the Act provides that the net profit derived in the 
 Issue Department during the current year shall be 
 
 241
 
 242 1 887- 1 89 1 
 
 deducted from the amount payable to the Bank 
 for the management of the National Debt, and 
 accordingly the amount of such profit is annually 
 carried to the credit of the Government. 
 
 The year 1888 will long be remembered by the 
 conversion of a great part of the National Debt 
 from the interest of 3 per cent, to 2f per cent. The 
 12th of April was the last day on which the assents 
 of ordinary holders of Consols and Reduced Three 
 per Cent. Stocks could be sent in. On the morning 
 of that day The Times said that up to the evening 
 of the previous day so many assents of Stock 
 holders had been sent in as would make the sum 
 of New Consols applied for amount to £450,000,000, 
 and that " the pressure at the Bank of England was 
 still very great." On the 13tli, Mr. Goschcn, the 
 Chancellor of the Excheijuer, said in the House 
 of Commons, " The total amount converted, including 
 New Threes, is £473,000,000. The total amount 
 not converted out of the total Funded Debt of 
 £558,000,000 is about £85,000,000. Trustees are 
 still allowed to hand in their assents up to the 
 12th of May and the 1st of June respectively." 
 An operation of this kind had never been attempted 
 before on so large a scale, and a great strain was
 
 THE BANK OF ENGLAND 243 
 
 put upon the staff of the Bank, in order to 
 accomplish the business satisfactorily. 
 
 Mr. Goschen, in the House of Commons, on 
 July 5th, moved the following resolution: "That 
 the Consolidated Three pounds per centum Annuities, 
 and the Reduced Three pounds per centum Annuities 
 shall be redeemable at any time after the expiration 
 of one year from the date at which a copy of this 
 resolution, having been inserted in the London 
 Gazette, is affixed on the Royal Exchange in 
 London, by payments of not less than £500,000 
 at any one time, in manner directed by any Act 
 to be passed." 
 
 During the spring and summer months the clerks 
 in the Stock offices were working at high pressure. 
 Volunteers were asked for from "the other side" 
 of the house ; accordingly the clerks in the Cash 
 offices (who had volunteered for the work), as soon 
 as they had finished their day's duties, hurried into 
 the Stock offices, where they worked with the other 
 clerks on the conversion till late at night or the 
 small hours of the morning. Many only left off 
 in time to catch the midnight trains to their homes, 
 and some who lived too far from London to be 
 able to do that took lodgings in the City, and did
 
 244 1 887-1 891 
 
 not see their wives and families from Monday 
 morning to Saturday night. The conversion proved 
 a success. On October 12th an official statement 
 of the result of the working of the National Debt 
 (Conversion) Act, 1888, was presented to Parliament. 
 We omit the details of the Stocks which remained 
 unconverted, and give only the principal results, as 
 follows : 
 
 Total amount of Three per Cent. Stock ) ^ ..-^ ,p . ^-^ 
 
 outstanding j -'y > 
 
 Two and Three-Quarters per Cent. Consolidated Stock, 
 
 converted from : 
 
 Consolidated Three per Cents. . . £320,312,024 
 
 Eeduced Three per Cents. . . . 63,134,990 
 
 New Three per Cents. . . . . 165,637,359 
 
 £549,084,373 
 
 Deduct — Cancelled between March 
 31st and October 5th, 1888 : 
 
 In exchange for an annuity 
 
 of £2,605,700 (Chancery 
 
 Annuity) . . . £34,625,778 
 On account of annuities 
 
 for life and terms of 
 
 years .... 145,025 
 
 Amount of Two and Three- 
 Quarters per Cent. Con- 
 sols at October 5 th, 
 
 54,770,803 
 
 1888 .... £514,313,570
 
 THE BANK OF ENGLAND 245 
 
 After his exertions in the business of the con- 
 version, the Governor, Mr. Mark Wilks Collet, had 
 the honour of a baronetcy conferred upon him. 
 
 At the half-yearly meeting held in the Bank 
 parlour on March 14th, 1889, Mr. William Lidder- 
 dale, the Deputy Governor, who presided, expressed 
 his regret that Sir Mark Collet had been attacked 
 by illness in November, and by medical advice had 
 gone to stay on the Continent until the return of 
 the warm weather. On behalf of the directors he 
 proposed a dividend of b\ per cent, for the half 
 year, free of income tax. In seconding the motion 
 Mr. W. Botley remarked that their £100 Stock was 
 quoted in the market at 327 to 330 — the highest 
 price it had ever reached. 
 
 In the previous pages we have had before us 
 robberies of the Bank by clerks in the employ of 
 the Governor and Company ; we have now to notice 
 a robbery committed by an agent. About the year 
 1888 the theft of £800 was traced to an agent of 
 one of the branches of the Bank. The robbery had 
 evidently been going on for some time, and it is 
 somewhat remarkable that it was not found out 
 earlier, when the accounts of the branch were being- 
 audited. On that occasion a bag of gold which
 
 246 1 887- 1 89 1 
 
 should have contained £1000 was missing from the 
 safe, but the agent, coming in at the time, by a 
 trick managed to get it replaced and to quiet any 
 doubt that may have arisen in the mind of the 
 auditor. Although that gentleman went aw^ay 
 apparently satisfied, others had their suspicions that 
 all w^as not satisfactory, and these suspicions were 
 afterwards increased when it w\is noticed that 
 certain private payments of the agent from time 
 to time were made by new sovereigns of a certain 
 date which looked as if they had been all taken 
 from one bao;. When that circumstance came under 
 the notice of the sub-asjent he had the contents 
 of the safe examined when the agent was absent, 
 and it was then found that one of the bags labelled 
 as 1000 sovereio-ns of a certain wei2:ht was deficient 
 in the weight specified, and contained not 1000 
 sovereigns but only 200 sovereigns on the top, the 
 remaining space being filled by metal counters. A 
 director who w^ent down to the branch made an 
 inquiry, and found in the agent's private box a 
 number of similar counters. The director told the 
 agent to go home and to consider himself suspended. 
 The agent, instead of so doing, took the night train 
 to Hull, and from that port departed in the first
 
 THE BANK OF ENGLAND 247 
 
 boat sailing to Holland. The particulars of this 
 affair were not much known in London, but the 
 local papers were full of the facts, or supposed facts, 
 of the case, and some account of them appeared in 
 the pages of Truth. 
 
 At the General Court on March 11th, 1886, the 
 then Governor, Mr. J. P. Currie, informed the pro- 
 prietors that the directors were in treaty for a 
 valuable site in Fleet Street, which could be used 
 as a branch establishment, not only for the con- 
 venience of the Law Courts, but also for the general 
 public. Some years previously the business of the 
 Bank " Chancery office " had been removed from 
 the Bank in Threadneedle Street to a temporary 
 office in the New Law Courts building. In 1888 
 the handsome new bank in Fleet Street was com- 
 pleted, and the business was again removed to the 
 new premises. The Bank was opened for the legal 
 and general- business on December 1 7th in that year, 
 and was called the " Bank of England Law Courts 
 Branch." 
 
 Towards the end of 1889 the editor of a weekly 
 publication called Answers offered a prize of a pound 
 a week for life to the reader who would, on certain 
 conditions, send in the nearest guess to the amount
 
 248 1 887-1 891 
 
 of coin ^Yllich would be in in a certain department 
 of the Bank on the evening of the 4th December 
 following. 
 
 In its account of the result of the competition 
 the same journal, on December 21st, gave the 
 subjoined particulars, which we here reproduce with 
 the consent of the proprietors of Answers : 
 
 "ONE POUND EVERY WEEK OF HIS LIFE FOK MERELY 
 SENDING US A POST-CARD. 
 
 " After examining three times the 718,218 post-cards 
 sent in, we award the biggest prize in tlie world to the 
 following gentleman : 
 
 C. D. Austen, 
 
 Ordnance Survey Office, Southampton. 
 
 "The amount in the Bank was £867,823, and Mr. Austen 
 guessed £867,825. It is remarkable that out of the 718,218 
 guesses no one was really near him, though eighteen were 
 within one hundred pounds. 
 
 " The scene at the Bank of England on Thursday, Decem- 
 ber 5th, when the figures were made public, was capitally 
 sketched by our special artist. 
 
 " Crowds poured in to see whether or not they were near 
 the figures, and telegrams were received all day at the Bank 
 asking for information. Those who were present at the 
 Bank will recognize the portrait of the gorgeous beadle, who 
 declared that he was almost pestered to death by the sudden 
 incursion of so many strangers.
 
 THE BANK OF ENGLAND 
 
 249 
 
 " No sooner were the figures out than runners attached to 
 various evening newspapers sped to the nearest telephones 
 and telegraph offices to wire the result to Fleet Street, 
 whence the news was speedily disseminated throughout the 
 United Kingdom." 
 
 About the year 1886 and those following, atten- 
 tion had been called to, and discussion had been 
 held, both in and out of Parliament, upon the state 
 of our gold coinage. Much of it was very deficient 
 in weight, and the Act of Parliament of 1870, which 
 had been passed to deal with the matter, was found 
 to be inefficient. In the early sixties the Bank 
 of England out-tellers (or collectors) were provided 
 with pocket scales and weights in order that they 
 might weigh any doubtful sovereigns and half- 
 sovereigns that might be tendered to them. These 
 instruments were not much used by them, as most 
 of them could pretty well detect light coins by 
 the appearance. Tradesmen and others were some- 
 times put to some inconvenience by clerks of the 
 Bank refusing to accept the gold they tendered, 
 in payment of their bills on the ground that the 
 coin was " light." 
 
 An Order in Council was issued on December 
 13th, 1889, which specified the 13th February,
 
 250 1 887-1 89 1 
 
 1890, as the last day on which any gold coin of 
 the realm coined before the reign of Queen Victoria, 
 and which was below its proper weight, might be 
 tendered at the Mint or at the Bank of England and 
 be exchanged at its nominal value. The time 
 allowed for that purpose was afterwards extended 
 to March 31st in the same year. On February 13th, 
 1890, The Daily News published an interesting 
 article, entitled "light gold," from which the 
 subjoined extracts are given. The automatic weigh- 
 ino; machines alluded to have lonsr been in use in the 
 Gold Weighing Office of the Bank. 
 
 " This withdrawal of light gold may no doubt be regarded 
 as a tentative, experimental measure, preparatory to a 
 further step in the same direction, and the course adopted is 
 a distinct abandonment of the principle acted on in the 
 proclamation already alluded to nearly fifty years ago, and 
 embodied in the Coinage Act of 1870 — the principle of 
 making the last holder of a gold coin responsible for its 
 full weight. In June, 1842, the Treasury entered into an 
 arrangement with the Bank of England that light gold 
 should be received on behalf of the Government, and paid 
 for by weight at the rate of £3 17s. IQUl. an ounce, the 
 rate at which the Mint issues gold coin. A Eoyal procla- 
 mation was at the same time issued calling attention to the 
 loss as to light gold, and directing that the Eevenue and 
 other Government departments should decline to receive all
 
 THE BANK OF ENGLAND 
 
 coins that were not of proper weight. This, of course, 
 created an immense sensation throughout the country. 
 Everybody took to weighing their gold coins. A good many 
 persons habitually carried scales about in their pockets, and 
 it became a customary thing for shopkeepers to deduct two- 
 pence for every grain they found short in the coins tendered 
 by their customers, and banks everywhere took to disregard- 
 ing the nominal value of the gold paid in to them and 
 allowing for it only by weight. 
 
 " Another Act passed last year, however, explicitly states 
 that that section has failed to maintain the integrity of the 
 gold coinage of the realm, and as most persons are aware 
 from their own observation, it has been practically a dead 
 letter except as regards the Bank of England, which has 
 systematically sifted out all the light gold coming into its 
 hands, and clipped it before passing it on to the Mint. A 
 great deal of this has been done at its own expense, no 
 charge being made to their best customers for light gold ; 
 but all who take worn coin to Threadneedle Street are 
 liable to find that their sovereigns dwindle to perhaps 195. 
 lOf?. or 19s. 8(1 or even less. They have at the Bank a large 
 number of wonderful little automatic machines which will 
 take a rouleau of coins, slip them one by one into a scale, 
 hold the balance steady until the coin is in position, then let 
 it go, weigh the gold very deliberately, and with infallible 
 accuracy shoot it off in this direction if it is full weight, and 
 in that direction if it is light. The light coins are then 
 borne off to another machine, through which they rush with 
 the speed of a millstream, each one getting a ruinous gash 
 as it passes through. No light gold coin is ever paid out by
 
 252 1887-189I 
 
 the Bank of England. But none of the other banks have 
 ever complied with the law, and as to private persons break- 
 ing each other's sovereigns and half-sovereigns, why in an 
 impecunious world like this such a thing is not to be 
 thought of. The law imposes no penalty for non-compliance, 
 and the man who should receive ten or twenty solid and 
 respectable-looking sovereigns and should begin to pick out 
 one or two of them to break them up and hand them back 
 would be thought to be seeking a quarrel. Any attempt to 
 enforce such a law now by such a proclamation as was 
 issued in 1842 would probably produce a much livelier state 
 of things than resulted then. The oldest sovereigns and 
 half-sovereigns then had been only about five-and-twenty 
 years in circulation; yet, as it has been shown, there were 
 £14,000,000 worth of coins found to be light. Seven or 
 eight years ago the Deputy Master of the Mint pointed out 
 that the coinage of the gold then circulating had begun 
 sixty-five years previously, and for thirty-eight years had 
 been permitted to become lighter and lighter each year. It 
 was reckoned then that there was about £100,000,000 worth 
 of gold in circulation, and that a good half of this, or 
 £50,000,000 worth of gold coinage afloat in the country was 
 under weight, besides being probably £650,000 deficient in 
 fineness. That was in the early part of 1882, and now we 
 are in the early part of 1890, and things, of course, are so 
 much worse. 
 
 " The manager of one of the largest of the London banks 
 yesterday said that the gold coin that passed through their 
 hands was extremely little of it defective in weight, and it 
 seems to be generally allowed that most of the light gold is
 
 THE BANK OF ENGLAND 253 
 
 in the country, or at any rate, that in the country there is a 
 very much larger proportion of light gold than in London. 
 Two reasons are suggested for this. One is that since the 
 Bank of England makes deduction for all short weight 
 coins, some banks take care to send in as little light gold as 
 they can in that direction ; that their good coins go to the 
 Bank of England, and their light ones down into the 
 country, where they are not liable to be challenged. 
 Another and perhaps a more feasible explanation is that the 
 country circulation is light, simply because the country 
 is further from the centre of original distribution. All the 
 coins that emanate from the Mint or the Bank of England 
 are of full weight, and to a great extent they circulate first 
 in London, and of course help to keep up the standard." 
 
 It had generally been understood by the public 
 that the Bank of England did not allow interest on 
 money left on deposit — as is done by the joint-stock 
 banks. In February, 1890, a resolution passed by 
 the Finance Committee of the Hampshire County 
 Council stated that the Bank of England had 
 expressed its willingness to allow any part of the 
 balances from time to time standing to the credit 
 of the County Council to be carried to a deposit 
 account, which might be lent at interest on the Stock 
 Exchange, by and at the responsibility of the Bank. 
 This course was considered to be a "new departure" 
 on the part of the Bank, and questions were asked
 
 254 1887-1891 
 
 in reference to it at tlie next meeting of the Bank, 
 held on the 20th March, to which the Governor made 
 this reply : " The arrangement made was not for a 
 direct allowance of interest, but that after the 
 Council had kept with the Bank a balance that 
 was regarded as sufficiently remunerative, the 
 Governors would lend it on behalf of the Council, 
 and give them the profits less a charge for com- 
 mission. That was almost an inevitable arrange- 
 ment, as, if not agreed to, the money would be 
 withdrawn. With reference to the larger question 
 of allowing interest, there w^as no doubt that the 
 Bank had suftered, and was suffering, from the 
 competition of other banks, who allowed interest 
 on deposits ; but, at the same time, the advantages 
 of security which the Bank of England offered had 
 been recognized by the maintenance of the deposits 
 at a fair amount. If, hereafter, they found they 
 were not sufficiently supported, the question whether 
 they should enter into competition with other banks 
 might be raised for consideration, but at present 
 no interest would be allowed on deposits." 
 
 There is one thing which had almost escaped a 
 place in our records, but which should not be 
 •forgotten, namely, the establishment of the Bank of
 
 THE BANK OF ENGLAND 255 
 
 England Club. The directors, with their usual 
 consideration for the welfare and comfort of the 
 clerks, permitted and assisted in the formation of 
 this club. Luncheon and tea rooms, kitchens, etc., 
 were built free of expense to the club on the roof of 
 the Bank above the India Office, and opened in the 
 year 1883. This accommodation was much appre- 
 ciated by the staff; the number of members in 1891 
 or thereabouts was over 750. 
 
 On March 5th, 1891, final judgment was given in 
 the House of Lords in favour of the Bank in the 
 important Vagliano case, which had occupied the 
 attention of the public and of the legal profession 
 for a period extending over some years. In giving a 
 brief account of the forgeries on Messrs. Vagliano 
 Brothers and the litigation which followed we 
 must go back some years, wdiich shall be done in 
 the next chapter.
 
 CHAPTER XVIII. 
 
 1887-1892 
 
 The Vagliano case — Glyka's forgeries — Action in Court of Queen's 
 Bench— Judgment— The Bank appeal — Appeal dismissed — Public 
 opinion — Bank of England v. Vagliano Bros, in the Lords — Final 
 victory of the Bank — Threatened panic — The Baring Crisis — The 
 Barings — Argentine finances — Collapse of Baring Bros. & Co. — 
 Application to the Bank — Action of the Bank — (guarantee fund — 
 The new Baring Company — Praises awarded to the Bank — 
 Freedom of the City to Mr. Lidderdale — Banejuet at the Mansion 
 House — Barings' enormous liabilities — Run on the Birkbeck Bank 
 — Queensland loan controversy — Management of the National 
 Debt — Increase of Governors' salaries. 
 
 llf ESSRS. VAGLIANO BROTHERS, well-known 
 -^*-'- Greek merchant - bankers, had kept their 
 account at the Bank of England for many years. 
 Their account was a large one, as much as £3,000,000 
 having passed through it in one year. All went on 
 as usual until between 18 th February and 12th 
 October, 1887, when their clerk, Anthony Isidor 
 Glyka, a young man of about thirty years of age, 
 who occupied a responsible position for which he 
 received the paltry salary of £180 a year, robbed 
 
 256
 
 THE BANK OF ENGLAND 257 
 
 them of some £70,000. He obtained this money by 
 a most ingenious system. He suppressed certain 
 foreign letters and substituted forged letters of 
 advice to tally with his forged bills, and he forged 
 bills of exchange and all the endorsements on them. 
 So cleverly was the work executed that he obtained 
 his employers' signature to the acceptances without 
 difficulty. He forged twenty-seven letters of advice 
 purporting to have come from Messrs. Vacina, of 
 Odessa, who were correspondents of Yagliano, to the 
 effect that Messrs. Vacina had drawn bills upon the 
 latter firm, which bills were in reality the forgeries 
 of Glyka. The bills which were the cause of Messrs. 
 Vagliano's action against the Bank were forty-two in 
 number; they were placed by Glyka from time to 
 time among genuine bills before Mr. Vagliano, who 
 signed the acceptances of the whole of them with 
 little or no examination, making them payable at the 
 Bank of England in the usual way. When accepted 
 the bills were put in an open basket in Glyka's room 
 ready for the messengers who should call for them ; 
 while they were there Glyka abstracted the forged 
 bills, kept them till they became due, and then 
 presented them at the Bank counter for payment. 
 Some he presented in person, and the remainder he
 
 258 1887-1892 
 
 got the clerks of stockbrokers through whom he 
 speculated to present for him, and he took the 
 money of them. As bills of exchange, for large 
 amounts especially, are usually presented by a 
 banker, the cashier in the first instance referred the 
 matter to his superior, who, finding the bill advised 
 in the ordinary manner, gave authority to pay it. 
 The frauds were detected through Glyka having 
 omitted to insert the name of the drawer in one of 
 the bills, and this led to inquiry. After Glyka's 
 arrest a number of india-rubber stamps bearing the 
 names of several firms abroad, and the intercepted 
 letters from Vacina, of Odessa, were found at his 
 lodQ;in2;s. 
 
 At the Guildhall, on October 13th, the prisoner 
 was charged with " forging and uttering," and 
 was committed for trial. On the 26tli of the same 
 month he was brought up for trial ; he pleaded 
 " Guilty," and was sentenced to ten years' penal 
 servitude. 
 
 Before the close of the year Messrs. Vagliano 
 commenced proceedings against the Bank for the 
 recovery of the money. The trial of the action was 
 looked forward to and afterwards followed with great 
 interest, as many important points as to the liability
 
 THE BANK OF ENGLAND 259 
 
 incurred by bankers in paying their customers' 
 acceptances were raised by it. Tlie case came before 
 tlie Court of Queen's Bench in June and July, 1888. 
 The plaintiff's claimed a declaration that they were 
 entitled to have their current account with the 
 defendants credited with £71,500, the amount of 
 certain bills of exchange, viz., those forged by 
 Glyka. 
 
 Counsel on ])ehalf of the Bank pleaded in defence 
 that they had received from the plaintiffs advice 
 notes respecting these bills ; the bills, when paid, 
 were returned to the plaintiffs with their pass-book, 
 with entries duly debited to them, with the bills as 
 vouchers for the debits ; plaintiff's kept the vouchers 
 and never objected to the debits ; that though the 
 plaintiff's suspected forgeries and irregularities were 
 committed with regard to their bills, and ought, with 
 reasonable care, to have discovered them, they 
 omitted to do so, or to give the defendants any 
 notice of their suspicions, and thereby induced the 
 defendants to pay the bills ; that the j^laintiffs 
 therefore were stopped from denying the validity 
 of the payment of the bills and the debiting of the 
 amounts of the same. Notwithstanding this defence, 
 the judges, following the precedent in the case of
 
 26o 1887-1892 
 
 Robarts v. Tucker,^ pronounced in favour of the 
 plaintiffs, but gave leave to the defendants to appeal. 
 The general opinion of the public was that the 
 decision was unsatisfactory. 
 
 The case of the Governor and Company of the 
 Bank of Eno-land v. Vao;liano Brothers was aro-ued 
 in the Court of Appeal before the Master of the 
 Rolls, Lords Justices Cotton, Lindley, Bowen, Fry, 
 and Lopes, on March 9th and May 21st, 1889. 
 Again Messrs. Vagliano won the day, and the 
 appeal was dismissed with costs. The Master of 
 the Rolls pronounced in favour of the plaintiffs, 
 but the majority in favour of the defendants. Still 
 dissatisfaction was expressed by various organs 
 of public opinion. The Barikers Magazine for 
 December, 1888, said : 
 
 "We leave it to our readers to say whether business 
 could possibly be carried on according to the methods 
 suggested by the judges and the present facilities to 
 customers continued. It is obvious that this would not 
 be possible." 
 
 Of course the Bank carried their case into the 
 
 ^ In this case it had been decided that when the endorsement on a 
 bill has been forged, and the banker pays the bill to the wrong i>ayee 
 in the belief that the endorsement was genuine, he cannot debit the 
 customer with the amount paid.
 
 THE BANK OF ENGLAND 261 
 
 House of Lords. The appeal of the Bank against 
 the decision of the Court of Appeal was heard by 
 their Lordships on June 15th, 1890. The appellants 
 — the Bank of England — were represented by the 
 Attorney-General, Mr. H. D. Greene, Q.c, Mr. 
 Poland, and Mr. Bray ; and there appeared for 
 the respondent Mr. Vagliano, who traded under the 
 name of Vagliano Brothers, Sir Charles Russell, q.c, 
 Mr. Finlay, q.c, and Mr. W. F. HoUams. The case 
 was adjourned, and again argued June 17th, 19th, 
 20th, 23rd, 24th, and 26th ; the decision was not 
 given till March 5th the following year — 1891. 
 The former decision of the Court of Appeal had 
 been a good deal influenced by the fact that Glyka, 
 the better to accomplish his fraud, had inserted in 
 the bills the name of C. Petridi & Co., a firm in 
 Constantinople known to Vagliano Brothers. The 
 wording of the Act is open to more than one 
 interpretation where it sa5^s that " Where the payee 
 is a fictitious or non-existing person the bill may 
 be treated as payable to bearer." The majority 
 of the law Lords, in giving judgment in favour of 
 the Bank, took a rational and common-sense view 
 of the case. The name C. Petridi & Co. was none 
 the less fictitious as 'payee because there happened
 
 262 1887-1892 
 
 to be a firm of that name in Turkey. Had Glyka 
 inserted the name of T. Smith & Co. it wouki 
 have been none the less " fictitious or non-existing," 
 although there might be a dozen firms trading in 
 that name. In fact, every one of the l^ills in 
 question was wholly fictitious, except the acceptance 
 bearing Messrs. Vagliano's genuine signature, on 
 which the Bank paid according to advices duly 
 received. As a writer of the time said : 
 
 "The House of Lords has decided that a fiction written 
 in the form of a bill of exchange upon an oblong piece of 
 paper, stamped with a bill stamp, is not the less a fiction 
 because its author has chosen to insert the name of a real 
 person as payee, though never intending that such real 
 person should, in fact, be the payee." 
 
 The question of supposed negligence was of more 
 practical importance to bankers than that of endorse- 
 ments. On this point also the Lords reversed the 
 finding of the Court below, and decided that the 
 Bank had not been guilty of negligence in paying 
 the bills so as to prevent them debiting their 
 customer with the amount paid. Although the 
 decision of the Lords was considered by commercial 
 men to be the right and just one, it was regretted 
 that the judges were so far from being unanimous.
 
 THE BANK OF ENGLAND 263 
 
 The respondents (Messrs. Vagliano) were ordered "to 
 pay to tlie appellants (the Bank) the costs of the 
 proceedings in the House and in the Court below." 
 
 In reviewing the events of the years 1890-1 we 
 have to consider another serious crisis ; but, unlike 
 the Overend-Gurney crisis of 1866, this one did not 
 end in panic. Had events been left to take their 
 course unchecked, probably the most wides23read 
 panic that had ever occurred would have happened ; 
 but such a catastrophe was averted, principally by 
 the timely intervention of the Bank of England, 
 under the guidance of Mr. Lidderdale, the Governor. 
 
 The period is known as that of the Baring 
 Crisis. Messrs. Baring Brothers & Co. had long been 
 known as a firm of the hio;hest standins; as foreign 
 bankers dealing largely in American securities. 
 Members of the Baring family had at sundry 
 times occupied seats in Parliament. The Eight 
 Honourable Lord Eevelstoke, the principal partner 
 in the firm, was a director of the Bank of England. 
 Nothins: dishonourable had been charo-ed against 
 him ; but being of a sanguine temperament, he 
 had allowed his firm to go far beyond the bounds 
 of prudence in their speculations. " Lord Eevel- 
 stoke," said a writer at the time of the crisis,
 
 264 
 
 " no longer acts as a director of the Bank of 
 England. The qualification of a director is £2000 
 Stock, a security which is just now worth £6600. 
 As the assets of the partners in the licj[uidating 
 firm of Baring Brothers & Co. were pledged to 
 the guarantors, the late head of that firm has 
 ceased to hold the necessary qualification, and is 
 therefore not entitled to a voice in the councils 
 of the Bank. It does not appear that any public 
 steps were taken to exclude Lord Revelstoke from 
 future meetings of directors of this institution, and 
 he has throughout acted so honourably that nobody 
 would dream of putting a slight upon him." 
 
 During the four or five years which ended in 1889 
 a rise in the market value of public securities had 
 been in progress; in 1890, however, this rise gave 
 place to a depression. South American securities, 
 following the general tendency, went down in price, 
 the fall being as great as 25 per cent, in all 
 Argentine Stocks. England had invested a large 
 amount of capital in the Argentine Republic, which 
 was regarded as a progressive and j)rosperous State. 
 Argentine affairs were the ultimate cause of the 
 Baring collapse. The financial affairs of Argentina 
 assumed an ominous aspect in May and June, 1890,
 
 THE BANK OF ENGLAND 265 
 
 when the negotiation for the sale of the Buenos 
 Ayres Western Eailvvay to an English syndicate 
 fell through. Matters came to a head when Dr. 
 Plaza, as agent for the Argentine Government, 
 endeavoured to induce Messrs. Baring Brothers & Co, 
 to negotiate a new loan. The proposal seemed 
 absurd in the circumstances in which the Govern- 
 ment was placed at the time, but unfortunately 
 Dr. Plaza had a hold on Messrs. Baring in their 
 liability to provide a sum approaching to £6,000,000 
 for the carrying on of the Buenos Ayres drainage 
 and water works. The Daily Gra^ldc of November 
 18 th (which gives a portrait of Mr. Lidderdale and 
 a sketch of a scene in the Bank Parlour), says : 
 
 "An appeal for assistance was made to the Bank of 
 England. Fortunately, the conditions under which the 
 management of the great national institution is conducted 
 kept them free from entanglements froin which so many 
 firms and private individuals have suffered. The crisis 
 which was thus brought about by an unusual style of 
 financing had reached a point at which it assumed the 
 magnitude of a national question. JSTot even the Bank of 
 England, having regard to the responsible position which 
 it holds, could venture to give its credit to the relief of 
 a banking house, whose liabilities were said to exceed 
 twenty millions, without something in the nature of a 
 sanction by the Government.
 
 266 1887-1892 
 
 "It was not until the Chancellor of the Exchequer and 
 the Prime Minister had been consulted that the Bank 
 consented to apply so much of its credit and assets as might 
 be necessary to meet the pressing and increasing demands 
 upon Messrs. Baring Brothers." 
 
 It was on Saturday, November 8th, that the 
 critical position in which the great house of Baring 
 was placed was made known in confidence to the 
 directors of the Bank. Those gentlemen considered 
 for nearly a week the difficult problem of how to 
 avert a national calamity. On the afternoon of 
 Friday, November 14th, a meeting of the chief 
 commercial men of the City was held at the Bank 
 of England and prolonged into the evening ; for 
 it was recognized that if the meeting separated 
 without coming to the right decision, the following 
 day w^ould witness a greater panic than had ever 
 before occurred. The course of action resolved upon 
 was that the Bank should undertake the liquidation 
 of Messrs. Barings' affairs, and that other firms should 
 give the Bank a guarantee against loss. It was be- 
 lieved that if time were given for realization the 
 Baring securities would enable that firm to pay 205. 
 in the pound and would leave a surplus. Before the 
 meeting separated guarantees to the amount of
 
 THE BANK OF ENGLAND 267 
 
 £4,000,000 had been subscribed, and shortly after- 
 wards the fund amounted to over £15,000,000. The 
 document finally agreed upon was as follows : 
 
 "Guarantee Fund. 
 
 "Bank of England, Novemher, 1890. 
 
 " In consideration of advances which the Bank of England 
 have agreed to make to Messrs. Baring Brothers & Co. to 
 enable them to discharge at maturity their liabilities existing 
 on the night of the 15th of November, 1890, or arising out of 
 business initiated on or prior to the 15th of November, 1890, 
 
 " We, the undersigned, hereby agree, each individual, firm, 
 or company, for himself or themselves alone, and to the 
 amount only set opposite to his or their names respectively, 
 to make good to the Bank of England any loss which may 
 appear whenever the Bank of England shall determine that 
 the final liquidation of the liabilities of Messrs. Baring 
 Brothers & Co. has been completed so far as in the opinion 
 of the Governors is practicable. 
 
 " All the guarantors shall contribute rateably, and no one 
 individual, firm, or company, shall be called on for his or 
 their contribution without the like call being made on the 
 others. 
 
 " The maximum period over which the liquidation may ex- 
 tend is three years, commencing the 15th of November, 1890." 
 
 A Joint- Stock Company was subsequently formed 
 for the purpose of taking over and carrying on 
 a portion of Barings' business, under the title 
 of Barino- Brothers & Co., Limited.
 
 268 1 887- 1 892 
 
 The Times of November 17tli said: "It is uni- 
 versally acknowledged that the Bank of England 
 have earned the thanks of the whole community 
 for the skill and promptitude with which they have 
 brought to a satisfactory conclusion a most difficult 
 and complicated piece of business." Numerous 
 testimonials of public appreciation of the conduct 
 of the Bank and the Governor also came from 
 other quarters. 
 
 On December 30th, Mr. H. R. Price, the Chair- 
 man of the Stock Exchange, Mr. S. Underbill, 
 the Deputy Chairman, Mr. Francis Levien, the 
 Secretary, and several members of the Committee, 
 attended on Mr. Lidderdale as a deputation from 
 the Stock Exchange and presented him with an 
 address, which said : " On behalf of the members 
 of the Stock Exchange, the Committee, as their 
 representatives, desire to express their high ap- 
 preciation of the admirable and effective manner in 
 which the recent monetary crisis was met by your- 
 self as Governor of the Bank of England, ably 
 supported as you were by your co-directors," etc. 
 etc. The document concludes with offering the 
 Governor and the directors "the very best thanks 
 of the community they (the Committee) represent." 
 
 I
 
 THE BANK OF ENGLAND 269 
 
 Mr. Price, in his introductory remarks, said : 
 " We are fully sensible of the great services 
 rendered by the Governor and his colleagues the 
 Deputy Governor and the Directors of the Bank 
 of England in the recent unparalleled crisis. We 
 believe that if the Bank had not acted in the 
 decided way they did a great disaster would have 
 befallen the mercantile community. The Bank of 
 England, of which' every Englishman is proud, in 
 its long career of wise, judicious, and able manage- 
 ment, has never rendered greater service than it 
 has in 1890. We do not presume to speak for 
 other bodies than our own, but we believe our 
 views on this occasion are entertained in every 
 circle of business men in the country." 
 
 The Governor, in accepting the address, acknow- 
 ledoed the willino; and cheerful assistance received 
 from others ; "In the first place, from Lord 
 Rothschild, whose influence with the Bank of 
 France w^as of such assistance to us in obtaining 
 those means, without which we could not have 
 rendered the aid we were enabled to give. 
 Secondly, the help of Her Majesty's Government 
 in the assurance of support if required, a support 
 which it has happily not been necessary to claim.
 
 270 1 887-1892 
 
 Equally valuable was the prompt assistance of 
 those who subscribed to the guarantee fund, with- 
 out which it would have been impossible even for 
 the Bank of England to have undertaken so 
 enormous a responsibility." 
 
 Public congratulations took a substantial form 
 when at the Guildhall, on May 6th, 1891, Mr. 
 Lidderdale was presented by the Guild of Grocers 
 with the freedom of the City of London in a 
 casket, which is thus described : " The casket is 
 eight inches long, six inches high, and four inches 
 wide ; the design and ornaments of the casket have 
 been suggested by some of the leading architectural 
 features of the Bank of England ; it is made of 
 18-carat gold, enriched with coloured enamels, and 
 inlaid with panels of precious stone. On it is 
 engraved the words : ' Presented to William 
 Lidderdale, Esq., Governor of the Bank of 
 England, by the Corporation of the City of 
 London, together with Freedom of the City. 
 Guildhall, May 6th, 1891.'" In the evening the 
 Lord Ma3^or and Lady Mayoress entertained the 
 Governors and Directors of the Bank at a banquet 
 in the Mansion House. After the Lord Mayor 
 had proposed the health of the Governor and
 
 THE BANK OF ENGLAND 271 
 
 Directors of the Bank of England, coupled with 
 the name of Mr. Lidderdale, and Mr. Lidderdale 
 had replied to the toast, Mr. Goschen, the Chancel- 
 lor of the Exchequer, and Mr. David Powell, the 
 Deputy Governor of the Bank, spoke. 
 
 The last words we have to record of the Barino- 
 crisis were spoken at the Bank meeting on Septem- 
 ber 18th. The Governor, the Right Honourable 
 W. Lidderdale, who occupied the chair, said : " When 
 the Bank of England first undertook the supervision 
 of the liquidation, the liabilities amounted in round 
 numbers to twenty-one millions sterling. To this 
 had to be added £7,200,000 for liabilities of 
 business entered upon previous to November 15 th 
 last, making £28,200,000 due to the public, the 
 bulk of it maturing within six months. The cash 
 advances to Messrs. Baring Brothers reached 
 £7,500,000. He did not expect the liquidation 
 would involve the guarantors in any loss." 
 
 A Building Societies crisis began on September 
 2nd, when the London and General Bank, Limited, 
 which was an offshoot of the Liberator Buildino- 
 Society, stopped payment. Jabez Spencer Balfour, 
 at that time M.P., but now a convict, was chairman 
 of that bank and of sixteen other companies. The
 
 272 1887-1892 
 
 distrust which followed the Liberator collapse ex- 
 tended to nearly every other Building Society, 
 including the Birkbeck Building Society and the 
 bank connected therewith. A fierce run was made 
 upon the Birkbeck Bank, although that company 
 had over a quarter of a million cash balance at 
 their bankers, and had assets of nearly six millions, 
 being nearly £300,000 more than their liabilities. 
 However, wdien it got abroad that the Birkbeck 
 had over a million pounds in the Bank of England, 
 the unreasonable run ceased. As a matter of fact 
 that Society had at that time £1,638,000 invested 
 in Consols — a portion of which they sold in order 
 to meet the run upon them. 
 
 During the latter part of the year 1891 there 
 was some controversy between the Bank of England 
 and the Queensland Government in resj)ect to the 
 Queensland loan. A speech was made by Sir 
 Thomas Mcllwraith, the treasurer of the Queensland 
 Government, in which he charged the Bank of 
 England with dishonourable conduct and breach 
 of faith in regard to the Colony's loan. On the 
 report of that speech reaching the Governor of the 
 Bank, he wrote to request a public withdrawal of 
 that "unfounded charge." In consequence of the
 
 THE BANK OF ENGLAND 273 
 
 Queensland Government failing to withdraw and 
 apologize for tliat charge he wrote to Sir J. F. 
 Garrick, the agent to the Queensland Government, 
 and informed him that the relations which had 
 subsisted between the Queensland Government and 
 the Bank of England must be terminated. 
 
 On January 25th, 1892, Mr. Lidderdale wrote 
 a long letter, which appeared in the London papers, 
 giving a history of the affair. This letter we give 
 on a later page.^ In regard to this matter the 
 Australian Insurance and Banking Record said : 
 "It is no part of the business of the Bank of 
 England to guarantee the floating of Colonial 
 Government loans, and if the Bank gave the alleged 
 promise it hardly acted within the bounds of 
 prudence . . . AVe think Sir Thomas Mcllwraith 
 must have fallen into a misapprehension." 
 
 Mr. Lidderdale kept in office another year, at the 
 request of the Bank, in order to complete the 
 negotiations the Government had entered into with 
 him in regard to the remuneration for the manage- 
 ment of the National Debt, 
 
 At a Court of the Directors held June 16th, 1892, 
 the proposals of the Chancellor of the Exchequer 
 
 ^ See Appendix.
 
 274 1 887-1 892 
 
 in resrard to tlie manas^ement of the Debt were 
 agreed to be recommended for adoption by the 
 proprietors. At a special general meeting of the 
 proprietors held on June 16th, Mr. David Powell, 
 the Governor, proposed that the proposals of the 
 Chancellor of the Exchequer be accepted, and the 
 motion w^as carried. The proposed changes would 
 produce a saving to the taxpayers of the country 
 of £45,700. 
 
 At the half-yearly meeting of the Bank held on 
 September 15th, Sir John Lubbock, Bart., brought 
 forward a motion to increase the annual sum 
 granted to the Governor and Deputy Governor for 
 their services. He proposed that the remuneration 
 of the Governor should be £2000, an increase 
 of £1000 ; and the remuneration of the Deputy 
 Governor £1500, an increase of £500. Sir John 
 remarked on the increase of business and the atten- 
 dant responsibilities of late years, and reminded 
 the meeting that the Governor and Deputy Governor 
 were at the Bank every day and all day long, and 
 also that they gave up their holidays, never having 
 during their term of office a reasonable vacation. 
 The motion was carried.
 
 CHAPTER XIX. 
 
 1893-1894. 
 
 Increase of Note issue — Woiueu Clerks — Building alterations — Daily 
 and Nightly Watcli — Resignation of the Chief Cashier — Criticisms 
 and comments — Punch's cartoon — New Appointments — Conclusion. 
 
 /~\N January 29tli, 1894, another Order in Council 
 ^-^ was dated from Osborne House, Isle of Wight, 
 authorizing the Bank to increase the issue of notes 
 to the extent of £350,000. 
 
 An innovation was made during this year by the 
 employment of female labour in the clerical work of 
 the establishment. Now that advertisements are 
 appearing in the newspapers for " lady cooks," " lady 
 housemaids," and " lady generals," the official term, 
 "Women clerks," seems to have been well chosen. 
 Miss J. E. Hogarth, the lady who was engaged to 
 be the superintendent of the new staff, entered the 
 Bank in 1893 to become acquainted with her new 
 duties, and in 1894 she had the oversight of some 
 twenty female clerks. The number has since been 
 increased to forty. 
 
 The works department of the Bank has had 
 u 275
 
 276 1893-5894 
 
 additional employment during the last few years. 
 The adoption of the electric light and its introduction 
 to the various offices led to a considerable amount of 
 work, which is still being carried on. A vast amount 
 of printing is done within the walls of the Bank ; 
 besides notes, dividend warrants, India rupee notes, 
 postal orders, and other things are printed there. 
 The business of this department, under Mr. W. J. Coe, 
 had so much increased that new machines had to 
 be erected. In order to provide room for them and 
 for the workers, Mr. Coe was put into possession of 
 the Accountants' Bank Note Office ; the work of that 
 office was transferred to what had been the Library 
 and Reading-room ; and for the accommodation of 
 the members of the Library and Literary Associa- 
 tion, convenient rooms were built in the neighbour- 
 hood of the Club and Nightly-watch rooms. 
 
 Other means are provided for the security of the 
 Bank besides the military guard already mentioned. 
 These are the daily and nightly watches which are 
 kept by members of the staff. On each Sunday 
 and holiday throughout the year the gentleman 
 whose turn it is to take the day-watch comes on 
 duty in the morning, and cannot leave until he has 
 given up the keys in the evening to those who come
 
 THE BANK OF ENGLAND 277 
 
 on the niglit watch. For many years it has been 
 the rule for the Chief Cashier or the Deputy to 
 reside on the premises ; but recently Clerks-in- 
 Charge have been ajjpointed who are qualified to 
 take the responsibilities of the Eesident Officer 
 should he be absent from any cause. Besides the 
 Clerk-in-Charge (who has his se^^arate rooms), two 
 of the stafi' come on duty every evening, and remain 
 in the building throughout the night. They take 
 rounds at stated periods, each accompanied by a 
 porter, and see that all is properly secure and that 
 all danger from fire and gas is avoided so far as 
 possible. Between nine and ten o'clock one of these 
 gentlemen is at liberty to retire to rest till 3 a.m., 
 when he has to get up and release his companion 
 from duty. Before the opening of the Bank Club 
 in 1883 the men on the nightly watch were required 
 to provide their own meals, with the assistance of 
 the porters ; but soon after that date the directors 
 graciously relieved them of that burden, and made 
 arrangements that dinner and breakfast should be 
 served to them in the nightly- watch room. Besides 
 those above mentioned, messengers, porters, fire- 
 men, etc., take their turns on duty in various parts 
 of the building.
 
 278 1 893- 1 894 
 
 In November, 1893, Mr. Frank May, who had 
 been Chief Cashier for a period of twenty years, 
 resigned under circumstances which caused a con- 
 siderable amount of excitement in the commercial 
 world, and gave rise to numerous comments in the 
 Press. Punch of January 13th, 1894, issued a 
 clever cartoon, entitled "A Dirty Crossing," which 
 we here reproduce. 
 
 A complete history of the events attending Mr. 
 May's resignation cannot be written at present. We 
 must therefore content ourselves with recording the 
 fact that the directors felt it to be necessary to make 
 sundrj^ alterations and restrictions, and that the fol- 
 lowing appointments shortly followed. In May, 1894, 
 Mr. Ernest Edye, the agent of the Leeds branch, 
 was appointed to the newly-created post of Chief 
 Auditor, and tw^o or three clerks were fixed as his 
 assistants in the new auditor's office. Mr. Horace 
 G. Bowen, who for some years had been Chief 
 Accountant, was appointed to succeed Mr. May as 
 Chief Cashier, and Mr. J. G. Nairne was made 
 Deputy Chief Cashier. Mr. G. F. Stutchbury was 
 appointed to succeed Mr. Bowen as Chief Accountant. 
 
 We have now traced the career of the Old Lady 
 of Threadneedle Street durino; her lono- life of 200
 
 The Old Lady of Threaclneedlc Street (loq. 
 
 - W" O dear O dear ! I wish I were out of this nasty mess ! 
 ,)_ O dear, U ae ^^^^ ^^^^ ,^ ^^^^^,, ^^ y,,„,,,,,on.)
 
 THE BANK OF ENGLAND 279 
 
 years. For tlie sake of lirevity many details of 
 interest may have been omitted ; but, we believe, 
 no events of importance have been entirely over- 
 looked. 
 
 An impartial student of the history of the Bank 
 of England will admit that its establishment and 
 continuance has been of immense benefit to the 
 country. The high position England has maintained 
 in regard to manufactures, commerce, and shipping, 
 may largely be attriliuted to the advantages of 
 a sound currency and a stable national bank. 
 Changes in its methods may be made should the 
 necessity arise ; but the institution which has aided 
 and guided the monetary affiiirs of the country 
 for two centuries may be trusted to act ably and 
 honourably until the necessity for its existence 
 shall cease.
 
 I
 
 APPENDIX A. 
 
 Mr. H. C. MacCarthy, of the Public Drawing Office, 
 has contributed the following items from his collection of 
 cuttings from old newspapers : 
 
 Thursday, 3rd August, 1732. 
 " About one o'Clock the Governor, Sub-Governor, and several of 
 the Directors of the Bank, came to their new Building in Thread- 
 needle-street, to see the first Stone laid : And after they had 
 viewed the Stone, on which liis Majesty's and their several 
 Names were engrav'd, the same was cover'd with a Plate of Lead, 
 and that with the Base of a Pillar. They then gave 20 Guineas 
 to be distributed among the "Workmen." 
 
 Wednesday, 1st January, 1735. 
 "A Curious Marble Statue of K. William III. was set up in 
 the great Hall of the Bank, when the Under Servants fired three 
 Volleys with small Arms." 
 
 February, 1735. 
 " On viewing the Statue of K. William, ne/cti/ erected in the 
 Great hall of the Bank. 
 
 Inscrib'd to the Governors and Directors. 
 " So look'd the hero, leaping to the strand 
 To save from ruin this devoted land. 
 The slaves of Rome, in wretched bondage bred. 
 Like guilty traytors, at his presence fled ; 
 281
 
 APPENDIX A. 
 
 Confounded, as with envious eyes they view'd 
 Unravell'd all their impious schemes of blood ; 
 While joys too big, too strong to be compress'd, 
 In raptures burst from ev'ry Briton's breast. 
 Orange, repeated, fills the nation's voice, 
 While either shore reverberates our joys. 
 From southern cliffs to Thule's utmost bound. 
 Orange innumerable tongues resound. 
 The fair Astnea quits her sad retreat, 
 And Justice now regains her awful seat. 
 The Laws^ distorted by tyrannick force, 
 Again resume their antient sacred course. 
 Again Religion, dress'd in native charms, 
 Supremely bright, invites us to her arms. 
 Our Rights confirm'd, our Property secur'd, 
 And dying Liberty to life restor'd : 
 These, all deriv'd from William's grand design ; 
 These, all entail'd in George's glorious line. 
 
 Look down, great prince ! from thy celestial throne ; 
 See ! heav'n and earth thy gen'rous labours own ; 
 Commerce, thy fav'rite, spreading thro' the world, 
 And British sails at either pole unf url'd ; 
 The grateful Bank thee their lov'd founder claim, 
 And raise this marble tribute to thy name. 
 Britannia's genius, hov'ring o'er the pyle, 
 Beholds serenely the commercial toil ; 
 Surrounding nations eagerly unload 
 Their heaps of wealth in this secure abode ; 
 Substantial gold for paper notes exchange. 
 Which sums immense in scanty lines arrange ; 
 The sterling, by its native weight forsook, 
 Crouded by thousands in a slender book.
 
 THE BANK OF ENGLAND 283 
 
 The bills that here their signature receive, 
 
 Pass tlie wide world, and Jews and Turlis believe, 
 
 Trust British faith, and the extended fame 
 
 Of FjiiglaniVs Bank ; such sanction has its name ! 
 
 To thee, great "William, all the glory 's due ; 
 Favour'd by thee, the rip'ning project grew ; 
 By men, like thee, wise, steady, just, and good, 
 Matur'd, at length on strong foundations stood ; 
 The merchant's fund, the nation's ready aid, 
 The soul of credit, and the life of trade. 
 
 Still shall it flourish, still attract the tide 
 Of Britain's wealth and the whole world beside 
 While George protects — such Avorthy rulers guide." 
 
 J. M.
 
 APPENDIX B. 
 
 (From the ''Standard.") 
 
 THE BANK OF ENGLAND AND QUEENSLAND. 
 
 The following letter has been addressed to the Agent 
 General of the Queensland Government by the Governor of 
 the Bank of England : — 
 
 "Bank of England, 25th January, 1892. 
 
 " Sir, — On the 7th October last I addressed to you a letter 
 calling attention to a speech made by Sir Thomas M'llwraith, 
 Treasurer of the Queensland Government, in which he used 
 language amounting to a distinct charge of dishonourable conduct 
 and breach of faith on the part of the Bank in connection with 
 the Colony's last Loan. Of this charge I requested a public with- 
 drawal. 
 
 " I received from you last week copy of a letter from Sir S. W. 
 Griffith, Chief Secretary of Queensland, which, while stating that 
 Sir T. M'llwraith did not intend to suggest, and was not under- 
 stood by his hearers to impute, any want of honesty or good faith 
 on the part of the Bank, describes his language as merely a 
 vigorous expression of disappointment at the failure of the Bank 
 to render assistance their Government still understood to have 
 been promised. This reply simply amounts to a justification of 
 the Treasurer's attack, and is, of course, entirely unsatisfactory. 
 
 " Let me call your attention to the following extracts from Sir 
 
 Thomas M'llwraith's speeches, which, taken as a whole, seem to 
 
 the Bank quite inconsistent witli tlie description given of them by 
 
 Sir S. W. Griffith. 
 
 284
 
 THE BANK OF ENGLAND 285 
 
 "In the speech which first came under notice, Sir T. M'llwraith 
 said, ' I believe the Bank of England did not behave in the way 
 that an honest Bank ought to have done.' Further on, after 
 stating that the Bank had promised to subscribe £500,000, he 
 says, ' Well, a syndicate was formed, and the Bank of England 
 did not take one shilling of it.' Lastly, he told his hearers, 
 'The moment she (Queensland) trusts to the Bank of England, 
 she will be sold in exactly the same way as they tried to sell us. 
 I would not have the slightest faith in them.' 
 
 " In the course of another debate, reported in the Queensland 
 papers of the 26th August, Sir Thomas M'llwraith declared, in 
 reply to Mr. Morehead, ' What I said was that no honest Bank 
 would have done so and so. I was perfectly accurate, and I might 
 have used much stronger words.' And later, in answer to Mr. 
 Archer, ' They (the Bank of England) stick to us when it pays 
 them, and when it does not they throw aside their obligation.' 
 
 "On the 14th October, in the debate Avhich arose in the 
 Assembly upon the telegraphic announcement that the Bank 
 demanded a withdrawal of his charges. Sir T. M'llwraith, after 
 going out of his way to bring the absurd accusation that the Bank 
 had made improper use of their knowledge of the amount of the 
 tenders, gave his version of what had taken place and of the 
 communications which had passed, and expressed himself thus : — 
 ' The only result has been that the Bank of England has not 
 kept faith with us. I was perfectly right in my statement of 
 the whole of the facts. I confirm what I said, and I cannot 
 possibly withdraw the words.' Towards the conclusion of the 
 speech he repeats the charge of breach of faith as follows : ' I 
 forgot to mention, I think, that the Bank of England not only did 
 not subscribe to the Loan the first time, but they even declined to 
 join the syndicate that took it up the second time. Their duty 
 to have done it is perfectly clear.' He concludes by observing.
 
 286 APPENDIX B. 
 
 ' I believe that the Bank of England did what it ought not to 
 have done, and that any private man would have considered 
 himself considerably aggrieved if any Bank in the world had 
 treated him as the Bank of England treated us.' 
 
 " If his language has any meaning, the speeches of Sir Thomas 
 M'llwraith to which I have referred accuse the Bank of direct 
 breach of faith and of conduct unworthy either of a corporation 
 or an individual, and I utterly decline to accept the explanation 
 put forward by Sir S. W. Griffith. 
 
 "I will now put on record the real facts of the case, which 
 differ greatly from the version given of them by Sir Thomas 
 M'llwraith. 
 
 "The Bank of England made a conditional promise to give 
 substantial assistance in raising the money required. That their 
 understanding of what this involved did not differ widely from 
 your OAvn is shown by your letter to me of the 7th October, 
 in which you state that if a deficiency of =£700,000 or £800,000 
 had appeared in the tenders, you would have expected the Bank 
 to make it up. 
 
 "There was no promise whatever to give any assistance unless 
 the public failed to come forward ; nor was there a promise 
 to give assistance in any particular form, whether in that of a 
 tender for Stock at the time of issue, of a temporary advance, or 
 of a contribution to a syndicate. 
 
 "In his defence of Sir T. M'llwraith, Sir S. W. Griffith 
 endeavours to limit his colleague's charges to the one point that, 
 although it was well known to the Governors that the Colony 
 had Debentures falling due on the 1st of July for £1,170,000, the 
 Bank, when asked, after the failure of the Loan, to state 
 definitely what amount they would give, only promised £500,000, 
 thus leaving the Queensland Government in a difficulty. I have 
 to remind you that at no time was it a question here of providing
 
 THE BANK OF ENGLAND 287 
 
 only for tlie Debentures. The Bank had been informed in April 
 that the Colony required a much larger sum and, after the issue 
 had failed received from you, in reply to a direct inquiry, a 
 communication stating the absolute minimum to be £700,000 
 beyond the £1,170,000, or £1,870,000 in all; and it was to 
 provide at least this amount that, in conjunction with you, they 
 addressed themselves. The Bank's contribution had no special 
 reference to payment of the Debentures, and there was no reason 
 why they should promise a larger amount than £500,000 until 
 endeavours had been made by you to obtain contributions from 
 other quarters. 
 
 "Messrs. Mullens, Marshall, and Co., the Bank's brokers — 
 having first ascertained on what terms the Stock could be placed 
 privately, and these terms having been agreed to — were instructed 
 to secure subscriptions to the Loan, and were authorised to put 
 the Bank doAvn for £500,000 cash, equal to about £550,000 
 Stock. After an interval of about a week, the amount required 
 had nearly been covered, but £170,000 to £180,000 was stated 
 by Mr. Daniell to be still unplaced. The Governors at once 
 assumed this balance, making the Bank's interest £670,000. 
 When I wrote my letter of the 6th October, I had for the 
 moment forgotten the extra subscription, but the fact remains. 
 
 " The Colonial Treasurer not only stated repeatedly that the 
 Bank did not take any of the Loan, but he also declared that 
 it was finally placed not by their help, but by that of two 
 gentlemen whom he named. That those gentlemen gave their 
 best assistance I do not question, but your own letter of 12th 
 June to the Chief Secretary does Messrs. Mullens, Marshall, and 
 Co. only justice in saying that the Bank's brokers ' in greater part 
 arranged the Syndicate.' Their charge for this service was paid 
 by the Bank of England. 
 
 "As soon as it became known that the money required by the
 
 288 APPENDIX B. 
 
 Colony had been provided quotations for the Stock improved, 
 and brokers and dealers became anxious to secure any that niight 
 be obtainable below market rates. A day or two later the Bank 
 were asked by their brokers whether they wished to retain the 
 Stock they had taken. There Avas every promise of one to 
 two per cent, profit if the Governors ordered sales in the market, 
 but it was felt to be unfitting that the Bank should derive 
 advantage from the failure of the original issue, and Messrs. 
 Mullens, Marshall, and Co. were allowed to part with the 
 stock at cost price. I have already furnished you with copy of a 
 letter in which they give their own account of the matter. 
 
 "As the final result of the operations, the entire Loan of 
 £2,500,000 was placed, and the Colony received about £1,000,000 
 in cash beyond the amount of the Debentures. I think I have 
 clearly shown that, directly and indirectly, the Bank materially 
 contributed to this result, and that the charge of having left the 
 Queensland Government in the difliculty to which Sir S. W. 
 Griffith particularly referred is absolutely unfounded. That Avhen 
 all the money had been raised the Bank felt free to part with 
 Stock which others were anxious to take in no degree lessens the 
 service they rendered the Colony, a service which I believe will 
 be recognised there when the real truth is known. As little does 
 it warrant the statement that they did not give the assistance 
 promised. 
 
 " There are other points on which Sir Thomas M'llwraith was 
 unjust to the Bank, but I pass them by. 
 
 " Although the substance of my present explanation was before 
 your Government when Sir S. W. Griffith wrote on the 27th 
 November, I learn with regret from your last letter that no 
 further communication from him on the subject is to be looked 
 for. It remains for me, therefore, to deal with the fact that the 
 Government of Queensland have failed to withdraw and to
 
 THE BANK OF ENGLAND 
 
 apologise for the unfounded charges brought by their Treasurer 
 against tlie Bank, and I have in consequence to inform you that 
 the relations which have subsisted between your Government and 
 the Bank of England are at an end, except in so far as their 
 continuance is required by the service of the existing Loans, 
 Avhich, being in the hands of the public, cannot be interfered 
 with. I am. Sir, your obedient servant, 
 
 " William Lidderdale, Governor. 
 
 "Sir James F. GAEPacK, K.C.M.G., Q.C., 
 
 "Ageut-Geneial to the Queensland Government." 
 
 The following is the letter from Messrs. Mullens, Marshall, 
 and Co. referred to : — 
 
 "4, Lombard Street, London, 
 
 ''January lUli, 1892. 
 
 "Dear Sir, — With reference to the arrangement of the last 
 Queensland Loan, we beg to state that the facts, so far as we 
 were concerned in them, were as follows : — 
 
 " We received instructions early in June to ascertain on what 
 terms the Loan, of which only a small portion had been taken 
 when publicly oflfered, could be placed in the market, and we 
 communicated the result of our enquiries to Sir James Garrick, 
 the Agent for the Colony, and to yourself. On hearing from 
 Sir James Garrick, through you, that his Government accepted 
 the terms named, we proceeded to find subscribers for the Stock, 
 being authorised by the Bank of England to enter their name for 
 £500,000 cash (say £550,000 Stock). At the end of about 
 a week we were still short of the amount required by £170,000 
 to £180,000, and on our Mr. Daniell communicating this to you, 
 you immediately desired him to put the Bank down for the 
 balance. Either the following day or the day after a demand 
 
 X
 
 290 APPENDIX B. 
 
 arose for the Stock, and Mr. Daniell asked you whether the Bank 
 wanted to retain what they had taken ; and being informed that 
 they did not desire to do so, or to make money out of it, we 
 allotted to others first a j^art of the £670,000, and the next day 
 the balance of that amount. 
 
 "The subscription given by the Bank was of very material 
 assistance to us in placing the Stock, enabling us to begin the 
 operation by saying that we took nearly a quarter of the amount. 
 " We are, dear Sir, yours faithfully, 
 
 " Mullens, Marshall, and Co. 
 
 "To the Governor of the Bank of England."
 
 INDEX 
 
 Advances to Government, i lo 
 — on goods, 1 27 
 Agent, Rol)bery h\ an, 245 
 Aislabie's punishment, 44 ■ 
 Althorp, Lord, 146 
 Anne, Queen, 28, 33, 34 
 Ansivers' prize, 247 
 Astlett's frauds, 92 
 Atlas, The, 157 
 Austen, C. D., 248 
 Australian Insurance and BanUwj 
 Record, 273 
 
 B 
 
 Baldwin, W., 166 
 
 Balfour, Jabez S., 271 
 
 Bank Act, 150 
 
 suspended, 1 59, 198, 214, 277 
 
 — buildings, 45, 65, 165, 275 
 
 — Charter, 18, 25, 30, 48, 59, 71, 
 
 91, 137, 156, 192, 201, 217 
 
 — Circulation, 56 
 
 — Holidays Act, 217 
 
 — Library, 168 
 
 — Notes {see Notes) 
 
 — of Credit, 7 
 
 — of France, 148, 200 
 -- Post Bills, 47 
 Bankers' Ma.gar.ine, 151, 260 
 Banking reform, 124, 128 
 Banks, Early European, 3 
 
 — Joint Stock {see Joint) 
 
 — Private {see Private) 
 
 Barclay, Bevan & Co., 208 
 Baring Brothers & Co., 264 
 Limited, 267 
 
 — crisis, 261 
 
 — Guarantee Fund, 267 
 Barnard's Bank, 209 
 Barnett, Hoare & Co., 179 
 Bates, R. M., 183 
 Benham, Canon, 65 
 Bentley, John, 199 
 BihliocjraxMj of the Bank of Eng- 
 land, 65 
 
 Bill brokers, 193, 199 
 
 Bimetallism, 227 
 
 Birch, J. W., 229 
 
 Birkbeck Building Society, 272 
 
 Black Friday, 53, 211 
 
 Blydenstein & Co., 222 
 
 Bois, Mr., Evidence of, 180 
 
 Boulton's Factory, 93 
 
 Bowen, H. G., 278 
 
 Bradbury, Agnew & Co., Ltd., vui 
 
 Branch IBanks, 129 
 
 Bubble companies, 41, 119 
 
 — South Sea, 33 
 Bullion Committee, 97 
 
 — Large stock of, 115 
 Burgess's robbery, 153 
 
 C 
 
 Capital increased, 25, 31, 55, io5 
 Cash payments suspended, 83 
 
 — Short supply of, 85 
 Chamberlayne's Bank, 8
 
 292 
 
 INDEX 
 
 Chapman, D. B., 180 
 Charles I., 3 
 
 - n., 3 
 
 Charter {see Bank) 
 
 Chartist riots, 165 
 
 Child & Co., 6 
 
 City of Glasgow Bank, 195 
 
 Claims on the Government, 88 
 
 Clearing House established, 61 
 
 Bank joins the, 207 
 
 Clerk-in-charge, 277 
 
 Clerks and Money lenders, 202 
 
 Clerks' Club, 255 
 
 Clerks discharged, 116 
 
 — Female, 288 
 
 — lined, 166 
 Clerks' holidays, 167 
 
 — Lil)rary, 168 
 Clifford, Sir Thomas, 6 
 Coe, J., 227 
 
 Coe, W. J., 276 
 Cole, J. W., 175 
 Collet, Sir M. W., 244 
 Commerce and Banking, 2 
 Committee, Bank Charter, 192 
 
 — Bullion, 97 
 
 — Finance, 93 
 
 — of both Houses, 157 
 
 Lords, 88 
 
 Secrecy, 90, 1 37 
 
 — Select, 87 
 
 Conversion of Stocks, 242 
 Cruikshank's caricature, 107, 133 
 Culloden, Battle of, 52 
 Cumberland, Duke of, 52 
 
 D 
 
 Daily News, The, 182, 200, 250 
 Daily Gh-aphic, The, 107 
 Daily Watch, 276 
 Daniell, Mr., 287, 289 
 Darien Company, 10 
 Davidson and Gordon, 1 76 
 
 Dead weight, The, 1 16 
 Dennistoun & Co., 194 
 Directors' remuneration, 232, 274 
 " Dirty Crossing, A," 279 
 Dobree, Bonamy, 202 
 Dollars issued, Bank, 93 
 Spanish, 86 
 
 E 
 
 Economist, Tlie 157, 181 
 
 Edye, E., 278 
 
 Elder's robbery and suicide, 153 
 
 Engrafting Act, The, 25 
 
 Erskine's defence, 92 
 
 Evans, D. M., 183 
 
 Evans' loss of notes, 146 
 
 Exchequer bills, Cii'culation of, 
 
 30 
 
 Forged, 149 
 
 Funded, 107 
 
 Exhibition of 1862, The Great, 204 
 
 F 
 
 "Facts, Failures, and Frauds," 
 
 183 
 
 Fauntleroy's forgeries and exe- 
 cution, 116 
 
 Fenton's forgery, 71 
 
 Forbes, Forbes & Co., 175 
 
 Forgeries, 58, 66, 71, 92, 94, 116, 
 I35> 204, 219, 232, 256 
 
 — Proseciitions for, 105 
 Forgery, Act for prevention of, 
 
 102 
 
 — Opposition to capital punish- 
 ments for, 106 
 
 — Punishments for, 26, 48, 60 
 Forrestei', Daniel, 153, 177 
 
 — John, 153 
 
 Four o'clock closing, 163 
 
 Fox, C. J., 87 
 
 France, Encroachments of, 27
 
 INDEX 
 
 293 
 
 Francis, Colonel, 223 
 
 Francis' Historx] of the Bank, 15, 
 
 135 
 Franco-German War, 217, 218 
 Funds, Conspiracy to affect the, 
 
 104 
 
 G 
 
 Garrick, Sir J. F., 273, 292 
 Gattie v. Bank, 234 
 
 Grenfell, 234 
 
 George I., 34 
 
 Gibbs, H. H., 227 
 
 Gilbart, J. W., 143, 151 
 
 Gilbart's History of Baiiking, iii, 
 
 163 
 Gladstone's bill, 153 
 Gladstone, W. E., 201, 214 
 Glyka's forgeries, 256 
 Goderich, Lord, 131 
 Godfrey, M., 16 
 
 — Death of, 21 
 
 — Pamphlet by, 1 6 
 Gold, High price of, 102 
 
 — Light, 1 50, 249 
 
 — payments resumed, 1 1 1 
 
 — Plethora of, 217 
 
 — weighing office, 250 
 Goldsmiths, 3 
 
 Goldsmiths, Conspiracy of, 28 
 Gordon, Lord George, 62 
 
 — riots. The, 6 1 
 Goschen, J. G., 242, 271 
 Gosling's Bank, 6 
 
 Great city frauds, The, 175 
 Greene, B. B., 223 
 Grenfell, H. R., 222, 230, 235 
 Gresham, Sir Thomas, 25 
 Griffith, Sir S. W., 284, 288 
 Griffiths, Rev. Dr., 185 
 Grocers' Hall, The, 2 1 
 Groves & Sons, T., 176 
 Grundy's action, 106 
 Guest's frauds, 59 
 
 H 
 
 Hanging for forger\-, 58, 133 
 
 Harley, Lord, 37 
 
 Harman, Evidence of Mr., 120 
 
 Herries, Mr., 131 
 
 High price of Bank stock, 245 
 
 Highway robbery of notes, 58 
 
 Hoare & Co., 6 
 
 Hogarth, J. E., 276 
 
 Holland, H. L., 213 
 
 Hubbard, J. G., 170 
 
 Hunt, T. N., 213 
 
 Indian Mutiny, 194 
 Interest, 15, 16, 35 
 
 — Exorbitant, 203 
 
 — Loss of, 94 
 
 — on deposits, 253 
 
 — reduced, 16, 115, 132, 169, 242 
 
 Jacobite rebellion, 49 
 
 James II., 3, 4, 24 
 
 Joint-stock banks, 128, 141, 151, 
 
 170, 192 
 Joint-stock Discount Co., 209 
 Jones, J., 237 
 Jopling's discovery, Mr., 142 
 
 K 
 
 Kenealy, Dr., 216 
 King, Lord, refuses Bank notes, 
 100 
 
 L 
 
 Laing & Campbell, 1 77 
 
 — Seaton, 175, 177 
 
 Lamb, Samuel, 5 
 
 Land Bank, The, 6 
 
 Law Courts Branch, 249 
 
 Lawson's History of Banking, 173
 
 294 
 
 INDEX 
 
 Levien, F., 268 
 
 Levi, Professor Leone, 228 
 
 Lewis, G. C, 198 
 
 Lidderdrtle, W., 245, 263, 270, 273, 
 
 284 
 Light Gold, 150, 249 
 Limited Liability Companies, 208 
 Liverpool Borough Bank, 194 
 
 — Lord, 124, 127 
 
 London and Eastern Banking Cor- 
 poration, 190, 193 
 
 — and Westminster Bank, 143 
 
 — Missionary Society, 75 
 Loyalty loan. The, 79 
 Lubbock, Sir J., 217, 232, 274 
 Lyall, G., 223 
 Lyndhurst, Lord, 136 
 
 M 
 
 Macanlay's History of England, 5, 
 
 7, 17 " 
 
 MacCarthy, H. C, 281 
 
 McCulloch's "Commercial Dic- 
 tionary," 55 
 
 Mcllwraith, Sir T., 272, 284 
 
 Mackswortli, Sir H., 29 
 
 Macleod, H. D., 142 
 
 Magnitude of Bank work, 229 
 
 Maltby, C, 175 
 
 Martin's Bank, 6 
 
 May, F., 278 
 
 May, H., 239 
 
 Mercers' Hall, The, 21 
 
 Michie, Mr., 197 
 
 Mine adventurers. The, 29 
 
 Mississippi bubble. The, 35 
 
 Monetary Conference, 227 
 
 Monopoly of the Bank, 18, 30, 128 
 
 Montague, Mr., 17 
 
 Morland, George, suspected, 69 
 
 Morniwj Herald, The, 193 
 
 Morris, J., 161 
 
 Mullens, Marshall & Co., 287, 289 
 
 Nairne, J. G., 278 
 
 National Delit, The, 35, 37, 5 1, 1 1 5, 
 
 132, 169, 201, 236, 242, 273 
 Neaves, Mr., 193 
 New Bank proposed, 89 
 Newland, A., 93 
 Newton, Sir I., 24 
 Nightly Watch, 276 
 "No Popery" riots, 61, 65 
 North American failures, 194 
 North, Lord, 71 
 North, Sir D., 6 
 
 Northern and Central Bank, 146 
 Norwich and Norfolk Bank, 146 
 Notes, Bank of England, Altera- 
 tion in form of, 172 
 
 Authorized amount of, 152 
 
 Detention of forged, 106 
 
 Forged, found on Clapham 
 
 Common, 237 
 
 Forged {see Forgeries) 
 
 Hoarded, 1 50 
 
 Increased issues of, 173, 209, 
 
 241, 27s 
 
 Left in a Cab, 146 
 
 Legal tender of, 139 
 
 Numbers of, altered, 167, 
 
 233 
 
 £1, Discovery of, 123 
 
 Paid in Gold, 1 1 1 
 
 Paid in Sixpences, 54 
 
 Payment in Gold prohibited, 
 
 108 
 
 Signature printed, 1 1 1 
 
 Split, 166 
 
 Trade in forged, 94 
 
 — Country, 114, 173 
 
 O 
 
 Old Patch, 66 
 
 Opposition to the Bank, 1 1;, 28, 29, 
 89
 
 INDEX 
 
 295 
 
 Overend, Guniey & Co., 135, 176, 
 
 179, 199, 208, 210 
 Overend, Gurney & Co., Limited, 
 
 208, 215 
 
 Palmer, J. H., 121 
 
 Palmerston, Lord, 198 
 
 Panics, 54, 74, 98, 1 1 8, 1 56, 1 93, 209 
 
 Pater.son, W., 7, 8, 14 
 
 Paul, Sir J. D., 183 
 
 Peel, Mr., 109 
 
 Peel, Sir R., 109, 135, 151 
 
 Pitt, W., 73, 75 
 
 Pole, Sir Peter, 119 
 
 Portal's exliiljits, 219 
 
 — mills, 173 
 
 Robbery from, 204 
 
 Powell, David, 271, 274 
 Prescott, H. J., 161 
 Price, Charles, 66 
 
 — Hilton, 6 
 
 — H. R., 268 
 Private Bankers, 170 
 
 Committee of, 170 
 
 Pultenay, Sir William, 89 
 Punch, 278 
 
 Q 
 
 Quakers and Dissenters, 20 
 Queensland Government, The, 
 272, 284 
 
 R 
 
 Raikes', Mr., failure, 145 
 Railway embarrassments, 215 
 
 — mania, 156 
 
 Rate of discount, alteration ob- 
 jected to, 155 
 Re-coinage, 24 
 Redpath's frauds, 1 89 
 Reduced Three Per Cents., 57 
 Reform (see Banking) 
 
 Reform riots, 132 
 Re2)ort of the Commons' Com- 
 mittee, 163 
 
 — of the Lords' Committee, 164 
 " Rest," The, 45 
 
 Restriction Act, 89, 109 
 Revelstoke, Lord, 262 
 Richards, Evidence of Mr, 119 
 Robarts, Lulibock & Co., 151 
 Robarts r. Tucker, 260 
 Robinson, Proposal of ]\Ir., 124 
 Robson's frauds, 189 
 Romilly, Sir Samuel, 135 
 Rothschild, Lord, 269 
 -N. M., 135 
 Rotunda, The, 239 
 Royal Bank of Liverpool, 215 
 
 — British Bank, 190 
 Runs, 45, 53 
 
 Russell, Lord John, 136, 159, 214 
 
 S 
 
 Sacheverell riots, 31 
 Sadleir Brothers' frauds, 187 
 
 — John, Confession of, 1 89 
 
 Suicide of, 187 
 
 Sanderson & Co., 195 
 
 — Mr., 135 
 
 Saturday early closing, 239 
 Seizure of money in Mint and 
 
 Exchequer, 3, 49 
 Shrubsole, W., 75 
 Silver, Fall in, 227 
 Smee, Alfred, 173, 204 
 
 — W. R., 149 
 
 Solemn Resolution, A, yy 
 South Sea Bubl)le, 37 
 Sovereigns issued, 1 1 1 
 Splitting Bank notes, 116 
 Standard, The, 284 
 Stanhope's, Lord, resolution, loi 
 Stephens' frauds, 190 
 Stephens, T. A., 65
 
 296 
 
 INDEX 
 
 Strahan, Paul & Bates, 182 
 Stuckey, Yiuceut, 1 5 1 
 Stutclitjury, G. F., 278 
 Subscriptions to charities, etc., 
 
 230 
 Suffell V Bank, 233 
 SusjDension of payment, 23, 83 
 Evidence of Governor, 86 
 
 Ten o'clock opening proposed, 
 
 170 
 Times, The, 155, 195, 209, 210, 
 
 214, 268 
 Tokens, 99 
 Tomkins, Action bruuglit bj- Mr., 
 
 149 
 
 Truth, 247 
 Turner's frauds, 1 1 2 
 
 U 
 
 Unclaimed dividends, 71, 105 
 Underhill, S., 268 
 
 V 
 
 Vagliano case, The, 255 
 Vansittart's resolution, 100 
 Vaughan's forgeries, 58 
 Victoria, Queen, 230, 241 
 Voluntary contributions towards 
 the war, 91 
 
 V\' 
 
 Waugh, Frauds of Colonel, 190 
 Wellington, Duke of, 132, 136 
 Western Bank of Scotland, 195, 
 196 
 
 — Branch, Frauds on the, 219 
 
 opened, 191 
 
 Whitfield, E. E., 3, 47 
 William III., 2i, 26 
 
 — Statue of, 26, 46, 281 
 Women clerks, 275 
 Wood, Sir Charles, 159 
 Work curtailed, 129 
 Works department, 275 
 Wren, Mr., 230, 232 
 Wrottesley, Sir John, 131 
 
 PLYMOUTH : 
 WILLIAM BRENDON AND SON, PRINTERS.
 
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