CHAPTER III.
ou want to know where they obtained the money in order to lend it? Well, from all those who had money to deposit—the merchants, the widows and orphans whose small incomes were derived from money lodged with the bankers; these all received a small interest from the goldsmiths, who lent their money again at a much larger interest; so you can see that when the king refused to pay, it was not possible either to return the principal or pay the interest to those of whom they had borrowed. Great was the distress, therefore, not only among the merchants, but among all who had lodged their money with the goldsmiths. The voice of the people grew so loud and angry, that at length Charles found himself compelled to pay the interest, though he never paid back the capital. In 1625 King Charles sent the Duke of Buckingham to Holland to borrow £300,000 on the pledge of the Crown jewels.
You can see by what I have told you how difficult it was for the people to find secure places wherein to deposit their money, and how ruinous was the interest demanded if, on the other hand, they desired to borrow. Great, indeed, was the need of some establishment capable of advancing money at a reasonable rate on the security of Parliamentary grants. One or two private bankers of high repute strove to improve matters. Especially may I mention Child and Hoare. To the former by common consent belongs the celebrity of having the first banking house, which was established in 1620 on the site of the present building; and I am proud to bear testimony to the fact that from that year to the present day, all through the troublous times of banking, it has maintained the high position and respectability in which Mr. Francis Child left it.[2] Hoare’s bank was established in 1680.
These men did something towards steadying the money market; but it was left to me to clear the country of the insecurity and rapacity which had so long obtained.
Before proceeding with my personal history, I should like to explain a certain method of keeping accounts before I came into power, which accounts I strictly paid up as they fell due. It was known by the name of tallies,[3] or tally.
“The word ‘tallies’ is derived from the French, and signifies cutting. The tallies were pieces of wood cut in a peculiar manner to correspond or tally. For example, a stick of hazel or some other wood, well dried and seasoned, was cut square and uniform at each end. The sum of money which it bore was cut in notches (a notch signifying so much, according to the size) in the wood by the cutter of the tallies, and likewise written upon two sides of it by the writer of the tallies. The tally was cleft in the middle by the deputy chamberlain with a knife and mallet, whereby it made two halves, each half having a superscription and a half-part of the notch or notches. Thus cut, one part was called a tally, the other a counter-tally. When these two parts came afterwards to be joined, if they were genuine they fitted so exactly as to be parts one of the other.”[4]
You will understand, therefore, “that the notches corresponded to the sum for which it was an acknowledgment; the writing on the other sides containing the date and the payer. The rod was so cut that each half contained one written side and half of every notch. One part was kept in the Exchequer and the other was circulated.
“When the time of payment arrived, the two parts were compared, and if they tallied or corresponded all was right; if not, there was some fraud, and payment was refused. Tallies were not finally abandoned in the Exchequer till 1834.”
Having thus cleared the ground, I will proceed with my story.
You already know of the sensation which my appearance in the world caused, but I have not yet told you that I started in life with the sanction and support of the Government, and that I received my Charter of Incorporation, as it was called, on the day I was born.
Those who had the charge of me found it no easy matter to fulfil all that was demanded of them by the Government for my safety. For, by Act of Parliament, passed especially for my benefit, they were authorised and commanded to raise the sum of £1,200,000 within a given time by voluntary subscriptions, and in case of their failing to do this, I was to lose my charter.
This was a most difficult undertaking, and under the circumstances its success was doubtful; for, as you may suppose, I had many enemies among the money-lenders and people opposed to the Government, who, from self-interest, did all in their power to ruin me. Happily, however, the subscriptions came pouring in from individuals, both native and foreign, and from bodies political and bodies corporate, and that so rapidly that within ten days the whole sum was obtained and my charter secured; and thus, bound together with the subscribers, I became a corporate body, under the name of the Governor and Company of the Bank of England.
And now I must tell you that with this £1,200,000, my original capital, I did my first stroke of business, which was to lend it to the Government, who were in want of money to prosecute the war, and who for the loan of it paid me interest at the rate of 8 per cent., with a further allowance of £4,000 a year for management, which, if you reckon up, you will find afforded me an income of £100,000 per annum—a nice little sum to start in life with.
To understand my position, you must hear something of my household and my housekeeping.
It was deemed needful and proper that I should have a governor, sub-governor, and twenty-four directors, all of whom, it was decided, must be either natural-born subjects or have been naturalised; and further to render them eligible for my service, they must have a certain sum of my stock—Bank of England Stock—standing in their names and for their use. The governor must possess £4,000 of it, the sub-governor £3,000, and each director £2,000, at least.
Regarding my position at this present time, you will scarcely believe how simple and economical was my way of living originally. I occupied only one room in the hall of the Grocers’ Company, and employed but fifty-four assistants, whose united salaries did not exceed £4,350.
I must here state that my governors and directors were no expense to me, but served me without proposing any advantage to themselves, save and except the interest they would receive from their contributions to the capital stock of £1,200,000, and the position they would derive from being of my household.
It was in this one room, with almost primitive simplicity, we lived and performed the duties of our household. I have a letter in my pocket, yellow with age and almost crumbling to pieces, written by a gentleman who paid me a visit in the days of my youth. He writes: “I looked into the great hall where the bank is kept, and was not a little pleased to see the directors, secretaries, and clerks, with all the other members of that wealthy corporation, ranged in their several stations, according to the parts they held in that just and regular economy.”
GOLDSMITHS’ ROW.
It is a pleasant picture which he draws, and one that I love to look back upon. I think we all derived benefit from working together in that intimate and kindly manner; it made us strong and of one mind. Of course, I have grown quite accustomed to a much grander way of living; it is a sign of my prosperity and my usefulness, and I am thankful, but I am afraid if you came upon me unawares in my grand parlour you would find me with a sad sort of yearning for the early primitive simplicity and kindly feeling.
Many were the rules and regulations I was subject to in those early days, and even now, all powerful as I feel myself to be, I am still governed by them. They were irksome, but I never thought of rebelling, for I knew that their object was to give me a high position and keep me out of the way of temptation to meanness and dishonour.
One was that I must never trade in any wares, goods, or merchandise whatever.
Another, that I was never to borrow or owe more than the amount of my capital, and that if I ventured to disregard this command I should bring down punishment on the heads of those whose money had endowed me with my fortune.
Again, I was strictly forbidden to pay any dividend at any time save only out of this same capital or stock.
Yet one more, I was to lend no money to the Government without the consent of the Parliament, under a penalty of three times the sum lent, one-fifth of which was to go to the informer.
How little I thought that a strict adherence and submission to this early discipline would pave the way to a future in which my movements would influence the whole body of the public, my opinions and determinations affect all the markets of the world, and in which my one room would have extended itself beyond three acres of ground; but I must not get on too fast—you will see all this for yourselves as the years of my history roll on.
My early life was not without its cares and struggles which strained to the utmost the talents and energy of my household. I was but three years old when I was first attacked, not as you may think, by scarlet fever or measles, but by ill-treatment and cruel sarcasm.
A child, by name Land Bank, living at Exeter Change, not very far distant from Grocers’ Hall, was ridiculous enough to set up as my rival. Had she confined herself to fair play while striving to win from me public favour, I think I should rather have enjoyed it, but believing that all things were allowable in love and war, she descended to be spiteful, and being gifted with humour and wit she used them against me without mercy.
Papers were circulated in all directions with the one view of injuring me. You will be able to see them, as I have preserved copies—
Here is one—“The trial and condemnation of the Land Bank at Exeter Change, for murdering the Bank of England at Grocers’ Hall.”
Another, which had a wide circulation, was one supposed to be my last will and testament, in which “I bequeathed my obstinacy and blunders, my self-conceit, my blindness, my fears,” and in which “I commanded my body to be burned lest my creditors should arrest my corpse.”
A third contained an epitaph—
“Here lies the body of the Bank of England, who was born in the year 1694—died May 5th, 1696, in the third year of her age.
“They had issue legitimate by their common seal £1,200,000 called bank bills, and by their cashier two million sons—called Speed’s notes.”
These papers, so widely circulated, were not without their effect, and for some time I and my people were in no enviable position. We had to struggle for a precarious existence—in fact, we had a difficulty to make the two ends meet.
My notes were at a heavy discount, and I had not always the money to meet the demands of my creditors. And, just as it always happens when one is short of money, everybody wanted to borrow of me, amongst others the Government sadly pressed me for a loan. Oh dear, that was a troubled period of my life, but help came and prevented disaster by tiding me over the difficulty.
It was very long before I found myself in a like dilemma, for I soon learned that to be short of money or, in fact, any difficulty in money matters, would deprive me of the confidence of the public, and that would never do; for to me, more than to anyone, confidence was money.
It was cruel behaviour of the Land Bank, but fortunately, except that it gave me a period of great anxiety, it did me no permanent harm. Indeed, now that I look back upon it from this distance of time, I think it was clever of the Land Bank to handicap me, a young beginner, with her weight of merciless wit, a thing very hard to deal with, or even to trace, when once it has issued from mouth or pen.
This little trouble being over, we went about our daily work in the one room as usual; work, which was gradually increasing both in quantity and responsibility, occupied us from morning till night, and the way in which we performed it called forth many a word of praise. I remember seeing the following in a journal which encouraged and pleased me greatly—
“There never was a body that contributed more to the public safety than the Bank of England, and who upon every emergency has cheerfully and readily supplied the necessities of the nation, and in many important conjunctions has relieved the nation out of the greatest difficulties, if not absolutely saved it from ruin.”
I may be excused for feeling proud, for I began to see that not only was I fulfilling my mission, but that the world was aware of it.
The work which occupied my early days was very complicated, although it fell far short of what I now perform. I will try and give you a little idea of how I spent my days.
Picture to yourselves my one room, with its directors, clerks, and secretaries each at his table or desk and ready for the special work allotted to him.
You want to know where I sat, I, the young and handsome girl. Well, I was everywhere, infusing life and energy and cheerfulness into all.
With clear head and accurate mind, I watched and verified every transaction, encouraging and helping all who came to me as far as it was possible, and giving my warnings gently where no help could be extended.
All is ready for business—it is early morning—and soon the door opens to admit a few at first who bring in their hands the peculiar sticks notched and written on, which were called tallies, and which I have explained to you in a previous part of my story. These people make their way up to a certain table and ask that money may be given them in exchange for the tallies.
This is readily granted for a certain consideration, provided the tally be correct—or may be, they desired to lodge the sticks with me. In any case I obliged them, and by my action I made tallies current payment in the land which, as my friend, Michael Godfrey, stated in his quaint pamphlet, “The country had long wish’t for,” and which certainly could not have been effected without me.
If you watch, you will see others passing into the room, bringing securities of many kinds and asking to borrow money upon them, which was readily granted, at much less interest than had ever been demanded before.
Others, who had confidence in me, came to ask that their money might be lodged with me, to which I assented, telling them that not only would we give them interest for the money so lodged with me, but that it would be as much at their disposal as though kept in their cash-box at home, and very much safer.
No. 1 is an exact copy of a section of an Exchequer Tally acknowledging the receipt of £236 4s. 3½d. on Oct. 25, 1739, from Edward Ironside Esq., as a loan to the King on Three per Cent. Annuities.
No. 2.—Each large notch represents £100, and a single cut of the notch signifies half the amount. Thus the upper line of No. 2 represents £250.
It was to the interest of all concerned in my establishment to reduce the interest of money, otherwise we could not have used it to advantage. We were receiving only 8 per cent. for my stock; the lower, therefore, we brought all other interest, the more valuable was my stock.
Previous to my starting in life, the nation had been paying from 12 to 20 per cent. interest for money, which, if it had continued, must have ruined the kingdom; and as, by the way I did my work, this would be no longer necessary or possible, those who had been, up to this time, making money in this fashion, were compelled to spend it on land or lend it at a moderate rate.
Others came in during the day to have their foreign bills of exchange discounted, which I did at the rate of 3 per cent. per annum, undertaking the inland bills and notes for debts at 4½ per cent. per annum.
This was the kind of work which I performed in my early days, and upon which has been built up that wonderful fabric of money transactions associated with my name in this the nineteenth century. I am afraid the very relation of my day’s work two hundred years ago has wearied you; if so, forgive me. I felt it necessary to my character to show you that the work undertaken by me from the very first was good and honourable, conscientious and helpful, and that wherever my household did a good stroke of business for itself it was not at the expense of others’ ruin; on the contrary, we could not help ourselves to riches without extending the benefit all round.
(To be continued.)