Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1908-01-09
BANK OF ENGLAND
People Lost Confidence When
Grown Appropriated Funds.
Coins Were Characterization Il.
Curtis Describes How the Stntc
Bank Was Then Organized.
-1ts Present Management.
From tho Washington Cor. st. Louis
Times)

BY L. G. Thorpe OF Angus, Iowa, to do
scribe does a general banking business
and theoretically Is not government in
stltution. although IL holds charter from
Parliament allowing exclusive privileges
and practically It's relations with the gov
eminent are quite as close as those of
the United states treasury to our govern
mcnt. 1t is famliarly called THE Old
Lady of Threadneedle Street." and is
one OF the most interesting institutions
IN the world. 1t handles all the govern
ment money, Is the depository for all the
revenues of the kingdom and pays all
the expenses of the government upon
orders from the cXchequer 1t manages
the public debt OF Great Britain and pays
the interest upon the bonds. For this
service the bank receives a commission
of about 100000 year and enjoys Il
monopoly.
Before the foundation of the bank Of
England the merchants of London were
in the habit Of dcpositing their cash bul l..
lion and other articles of value in the
tower, under the protection of the King
In 1910 however, King Charles l, being
in great straits for money because of his
fatal dissolution OF Parliament before il
had voted the annual supplies for the
government, contscated the deposits. The
merchants were bankrupt: they had no
money to pay their bills or to transact
their business and after prolonged nego-
tiations they Jointly agreed to let the
King have $1,000 upon receiving adequate
security and ne returned the valuables
he had confiscatcd. The whole of the
loan was ultimately repaid with interest
but confidence in the royal honor was
gone: the tower was no longer considered
safe depository and the merchants
kept their surplus funds In their own
house, hidden away in secret places or
stored in ron-bound chests that were kept
constantly under guard.
Then the goldsmiths became deposit
| aries for bullion. upon which they issued
notes. and their customers were allowed
! to draw upon them to meet their bills.
| In that way banking IN England began,
and the goldsm!ths of London were the
! first persons in that country to he call
ed bankers. They acted as individuals,
| however and, although several schemes
for joint stock banks similar to the Bank
of Venice and the Bank of st. George in
Genoa Were proposed under the govern
ment of Cromwell. it was not until 1854
in the reign OF William and Mary that
the act was passed Incorporating the
| Bank of England
The hank was proposed and the act
was secured by William Paterson. a
Scotchman from Dumfresh!re, who
aftcrward attained an odious reputation
because of the failure of wild specula-
! ton to settle a colony to be called Ne"
Caledonia upon the isthsnus of Panama.
Four years after he had founded the
bank Paterson sailed with 200 men
| oolonists and was afterward joined by
500 more, who. after terrible sufferlngs
persisted from disease or were murdered
by the Spanlards and the natives. Few
Of them ever reached home. paterson
became insane, and is said to have com
mnted suicide. He was never governor
of the bank. and was a member of the
board of directors for only one year.
The organ cation of the bank and Its
early development Is due to Michael God
frey, an East India merchant; Charlie:
Montague. Earl Of Halifax, who was
chancellor Of the exchequer under VIII
liam and Mary and Sir John Houblon
a goldsmith The bank now stands upor
the site of the lattcr's home and garden
Houblon was the first governor Michae
Godfrey was the first deputy governor
He wrote and issued the first advertise
| ment. explaining the purpose and plar
, of the institution, and asserted thai
those who lodged their money with the
bank would have il much more safe and
quite as much at their disposal as II II
were in the hands OF goldsmith or ir
their own chests. He had attacked the
honesty OF the gol1smiths and declared
that II the money which had been lodged
with them for four or FIVE years had beer
lodged with the bank It would have pre-
vented 1t from being 50 scandalousll
clipped. He predicted that this clip
ping" of the coins OF their customers
by the godsmiths would cost the natior
Gl.5oO.OoO or G2oooo", Michael Godfrey
was shot July II, 1881. little more thar
six months after the opening OF the bank
at the siege of ..amur. Belgium where
he had gone to make report to klns
William concerning its operations. The
King was then hcsieging the french
who occupied that place.
The Bank OF England was whig pro
iect and has always been an object o.
great interest to the Wing party. Al
though it is now entirely out or politics
it was the object of attack by the torle!
for two centuries
The charter was given by Parliament
to a corporation to be called "Ihe GOV
ernor and Company of the Bank OF Eng
land" and II continues TO carry ina
Official title unto this day. The condl
ton under which II was granted was tina
the stockholders should make voiun
tary loan of 5000 600 to the government
for the purpose Of carrying on the wa
with the French. which sum was to b.
repaid In instalments of $4,000 yea
The bank was given monopoly right u
issue notes for as much money as II ad
vanced to the government and the gov
eminent guaranteed the payment OF thu
notes. The charter has been amended or
several occasions. but in principle re
mains the same. and, although ii is thu
sole financial agent of the government
and handles all Of the government money
the board OF governors has never oeei
composed of politicians, and for genera
tons political influence has been inehec
tive in their selection.
The original stock of the bank wa
CT 200 900 which has since been increased
from time to time, until it Is now Glt
bS 600, and it is cry widely distributed
throughout the kingdom. The priva:
deposits are about $500 OO 0o0. the govern
ment deposits average 10000 600, the loan
and discounts average $25o,oN,ooo.
Directors are elected annually, n
stockholders having the right to vote
Ouakers and Hebrews are not eligible
and n director must he tho owner o
$40 O,n In stock They are paid saarie
of 81, 500 each The directors elect an