Bank of England

Waikato Times, Volume 122, Issue 20440, 5 March 1938, Page 13 (Supplement)

Bank of England

A Glimpse of Its History :: Meeting the Rush

(Leo Condon)

BACK IN THE TIME of the Stuarts, merchants had nowhere to keep their Idle money except at the Mint. That satisfied them until Charles I happened to notice that they had a useful £200,000 lying there. He swiped the lot. The merchants protested, so, just for the sake of appearances, he agreed to call it a loan. The merchants stopped keeping money at the Mint, and left it with the goldsmiths instead. The goldsmiths got so much money as trade developed that they put £13,000,000 in the Exchequer for safe keeping. Charles II noticed it there, and swiped the lot. The Merchants Raised Another Clamour, this time with such effect that he not onlv had to call it a loan, hut actually paid six per cent, interest. Later, the interest was halved, and the merchants muttered darkly about “next time.” William and Mary came to the Throne. William had a war with France on his hands, and he needed money. He needed £1,200,000 and offered interest at 8 jper cent. The merchants and the goldsmiths refused to bite. Various other means were tried, including lotteries, but they all failed. Then one William Paterson put up the following proposition: Issue the loan, and give those who subscribe to it the right to form a bank. And give this bank the right to handle the Government’s money. William and Mary liked the idea, the Government thought it no worse than a lottery, anyway. The . House of Commons agreed to the necessary Bill reluctantly, and the House of Lords more reluctantly still. The Privy Council jibbed altogether. William happened to be away at the time, so Mary went down to the Privy Council and argued. She argued herself hoarse and the Council to exhaustion. After one final session lasting a solid six hours the Council uttered a weary yes. So the Bank of England Was Bom. Paterson became its first Governor. Now he was a real man of mystery. Compared to him, the life of Montagu Norman is a clear blue sky. Paterson came from Scotland. He had once been a preacher, dis- %■' appeared, and bobbed up again on the Spanish Main. Onco more he disappeared and turned up in London, with a very, very handsome fortune. How did he get it? people asked, and he explained that he had helped to raise a sunken Spanish galleon with £300,000 of treasure on board. Other wanderers from the Spanish Main claimed to remember him as a businesslike pirate. The wit« of the time noted with sardonic h W ionr that it was a Scotsman and a Dutchman who used Spanish money for a French war and thereby floated the Bank of England in 1094. To make sure that the Bank would get its interest, the Government put a tax on—among other things—beer. ales, and liquors, and handed the money over to the Bank. In 1707 fears of invasion hv the Pretender led to a run on the Bank, judiciously encouraged by the goldsmiths and High Tories. To save the Bank, leading Whigs beta loaded with guineas to reassure the crowds that clamoured for gold instead of paper banknotes. In 1754 fear of invasion by the Young Pretender brought another run, again judiciously aided toy the goldsmiths. This time the Bank Resorted To Trickery. The clerks paid out all right—but they paid out slowly, in sixpences and shillings, counting every coin, while the queue of waiting people strr.tched for more than a mile down Ludgate Hill into Fleet Street. To calm them the Bank had a large number of waggons piled with boxes that looked as if they contained bullion. These waggons were taken ostentatiously into the front entrance to the Bank—and quietly out again by a back passage, to detour once more to the front. Reassured that the Bank had plenty of money, the queue broke up. Twenty-five years later Lord George Gordon brought a mob to the very walls of the Bank, intent on ravishment. Clerks hastily assembled on the roof of the building armed with rulers, inkpots and other miscellaneous missiles. Troops lined the road outside, and in the combat that followed inkpots did bloody service. Ever since then, a platoon of Guards have been daily on duty at the Bank, though why they should guard a private bank any more than a public house has never been answered. Charles Price was a master of disguise and of forgery. With the aid of his mistress he robbed the Bank of England systematically for 50 years. Old Pa*ch they called him, because in a favourite disguise he wore a patch over one eye. The whole coun- - try sought the miscreant Old Patch, and P nobody more assiduously than Charles Price himself, the steady £20,000-a-vear-man-about-town. Once, in fact. Price noticed the peculiar behaviour of a fellow-traveller aM denounced him as Old Patch. For thus denouncing himself, the Bank paid him a handsome reward. When at last they caught him. Price was an old man. He complacently saved the hangman trouble by hanging himself in his cell.

Then thej-e was Henry Fauntleroy, who as a young man showed such promise that at 23 he was head of one of the biggest financial houses In the City. He had a serious, beautifully-modelled face. He worked hard, and people Trusted Him As They Would a Saint. But at night he cultivated expensive ladies and rare wines. It was 15 years before Reople discovered that by day he had been licitly cultivating the Old Lady of Threadneedle Street, and by that time he had got away with £36o,ooo—chiefly by forging bills and getting loans from the bank on stock that belonged to other people. He adjusted the rope round his own neck as carefully as if he were adjusting his cravat, and stepped into the next world with no more fuss then stepping into the next room. Those were bad days for the reputation of the Bank. Its crude banknotes invited forgery, and the laxness of the accounting system was a temptation to fraud. A period of national poverty induced thousands to try their desperate luck. Most of them were caught, and inexorably hanged. The Bank knew not the quality of mercy. It exacted its pound of flesh every Monday morning at Tyburn and Newgate. Those Monday mornings became a national nightmare, as dozens of poor wretches, women and men, were strung up together for some offence against the Bank of England. Cruickshank, the artist, passed Newgate one such morning, and the sight so horrified him that he went home and drew an imitation Bank of England note. But the £ was a hangman’s rope, and the figures of men and women, hanging. He presented the Old Lady of Threadneedle Street as a Monster Feeding On Children. The “banknote” was printed in thousands and roused a stir of horror and pity that forced the Government to abolish the death penalty for fraud. But as a grim reminder of those days there remained the haunting figure of a woman in black. “ The Bank Nun ” they called her. Years earlier, she had been the sister of a young clerk in the Bank of England, Philip Whitehead. He adored this 19-years-old sister of his, and set her up in a fine house, surrounded her with fashionable friends, showered on her more luxuries than his income from the bank could afford. The directors rebuked him for his extravagance and he resigned. Later he was caught with a forged bill for £B7 10s. They had him hangea without troubling to inquire into the circumstances. Friends took his beloved sister Sarah away so that she should know nothing of the tragedy. One day, however, Sarah walked into the Bank of England and asked after her brother. Brutally a clerk told her the truth. Sarah collapsed. When she recovered her mind had broken. Daily after that for 25 years she went to the Bank and waited for her brother. When he did not come she went inside and asked for him. Officials, Shamed Into Gentleness, answered her courteously: “Not to-day, madam.” “ When he comes, tell him that I have called,” she would say, and then depart. For 25 years Sarah Whitehead haunted Threadneedle Street. She died, and the City sighed its relief. Since those days the Bank has strengthened its defences, so that it would take a genius to rob it of any substantial sum. Even so it has at least once been at the mercy of a man. The Bank directors once received a letter boasting that the writer could get into the bullion vaults at any time, and offering to meet them there at any hour they cared to name. Half inclined to believe the letter a hoax, the directors named one midnight, and descended the vaults armed with ropes, rifles, and lanterns. Promptly at the hour they heard a mysterious scratching under the floor. The boards lifted, and there appeared—the head of a smiling Cockney workman. He had been repairing the drains and found this way into the vaults. Hastily the directors checked the gold, and having made sure that all was there, gave the workman £BOO for not taking advantage of the Lady. Nowadays the Old Lady of Threadneedle Street is rich and prosperous. Shareholders get a regular 12 per cent, per annum and though the Bank Pretty Well Runs Itself, Mr. Montagu Norman and his fellow-direc-tors have terrific power over the life of the country. They do their job well; smoothing out the bumps in foreign exchanges, arranging payments from countries that hate parting with money. They see that the Government gets all the credit it needs, and by controlling the rate at which money is lent try to keep the wheels of industry running at an even pace. Thev never abuse their power: but the fact that they have it has brought into being a strong section of opinion which thinks the Bank ought to be controlled by the Government Actually, Threadneedle Street already works in close contact with Whitehall.