The Bank of England by Paul Murphy
The Bank of England is the United Kingdom’s central bank. Today, some of the bank’s main responsibilities are:
Design and print bank notes (which it has had sole rights to for over 300 years)
Store gold in its vaults on behalf of its customers
Act as Treasurer for raising money and managing the government’s debt
Safeguarding the value of the nation’s money by putting downward pressure on inflation
Controlling interest rates
Duke of Wellington Statue outside The Bank of England
History
In the late 17th century, King William III found that the long, ongoing war against France was taking its financial toll. So William Paterson, a city merchant and great financial genius of the time, along with Michael Godfrey, also a merchant, proposed a public loan. The scheme was to set up a National Bank, which would lend its share capital to the government. Investors would receive a guaranteed return through money raised from a new levy on shipping and alcohol. This was know as the “Tonnage Act”.
The proposal was put to the cabinet by Charles Montage, 1st Earl of Halifax, who, at the time, was Commissioner of the Treasury and was made Chancellor of the Exchequer in reward for establishing “The Bank of England” in 1694. In just 11 days, £1.2 million had been raised. The bank was given a Royal Charter on 27 July 1694 (a Royal Charter is a formal document issued by the Monarch as a letter of patent).
The Bank of England was founded as a private bank, but by 1844 it had become the official Central Bank of the United Kingdom. In 1997 the bank was given independence by the labour government’s Chancellor of the Exchequer, Gordon Brown, under the leadership of Prime Minister Tony Blair.
The first Governor of the bank was Sir John Houblon, grandson of a French Hugenot refugee. Today’s Governor, Mark Carney, a Canadian, is the first non-British born Governor of the bank.
Old Lady of Threadneedle Street
There are several possible theories for this term, but two of the more plausible are:
1. A cartoon satirising the government’s constant interference in the Bank’s affairs. The illustration by James Gillray, entitled “Political Ravishment” or “The Old Lady’s in Danger”, showed William Pitt, the Prime Minister, picking the coin-filled pockets of an old lady, personifying the Bank, whose dress is made of £1 notes.
2. A lady named Sarah Whitehead, whose brother Philip was found guilty of forgery in 1811 and was executed for his crime. Sarah was so shocked she became unhinged and for the next 25 years she went to the bank asking for her brother.
Architect John Soane
Locations and Architecture
The bank first opened in July 1694 at Mercers Hall, Cheapside. In November the following year it moved to Grocers hall, Princes Street, remaining there until 1734, although work was started on its present location in Threadneedle Street in 1724. George Sampson was appointed architect on the first bank to be built in Threadneedle Street, which was finished in 1735. Robert Taylor expanded the building in 1765 adding the famous courtroom, where the Governor and committee meet every month to discuss interest rates, amongst other business.
When rebuilding the Bank (1925-1939), the architect Sir Herbert Baker moved the room from the ground floor to its present location on the third floor.
During riots in 1780 a mob attacked the bank. The rioters were dispersed by the military. After this, the government sent guards every night to the bank and they became know as the Bank Picquet. The guard attended every night until 1973 when the bank set up their own security.
The riots prompted the third, and arguably the most famous, of many architects to work on the bank John Soane, to build a huge, strong windowless wall to encircle the bank in 1788. This is known as the curtain wall and it covers the entire 3.5 acre site of the bank as it stands today.
The Bank of England remains as relevant to Britain today as it did at its conception in 1694, when the founding charter stated its purpose:
“To promote the public good, and benefit of our people”.
