The Bank of England in the Peninsular War, 1807 – 1814
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“Money is a good soldier, sir, and will on” – The Bank of England in the Peninsular War, 1807 – 1814 Max E. Rossiter Department of History, McGill University, Montreal August 2014 A thesis submitted to McGill University in partial fulfillment of the requirements of the degree of Master of Arts © Max E. Rossiter, 2014 Contents Abstract .................................................................................... III Acknowledgements ................................................................... V Section 1: Introduction – The Bank of England in the wars against France, 1792 – 1807. ...................................................... 1 Section 2: From Gold to Paper, 1807-1810 .............................. 23 Section 3: The Crisis of the Bullion Committee and the continuing War, 1810 – 1811 ................................................... 46 Section 4: Bickering over Bullion; disputes between the Bank and the government, 1811 - 1812 ............................................. 67 Section 5: The Final Hurdle; Wellington’s Victory and the Role of the Bank, 1812 - 1814 .......................................................... 87 Bibliography ........................................................................... 107 I II Abstract This thesis examines the role of the Bank of England during the Peninsular War. Between 1807 and 1814, Britain was involved in a war in the Iberian Peninsula against Napoleonic France. Due to changes in the British monetary system in the late eighteenth century, the Bank of England became increasingly attached to the British state and its ability to wage war. This, however, often led to arguments between the Bank and the government. Despite this, this thesis will demonstrate that the Bank of England saw itself as self-consciously part of the British state and was a vital part of the victory in the Peninsular War. Ce mémoire examine le rôle de la Banque d’Angleterre au cours de la Guerre d’indépendance espagnole. Entre 1807 et 1814 la Grande-Bretagne fut impliquée dans une guerre dans la péninsule ibérique contre la France napoléonienne. En raison de changements dans le système monétaire britannique à la fin du XVIIIe siècle, la Banque d’Angleterre acquit progressivement un rôle de plus en de plus important dans l’État britannique ainsi que dans la capacité de celui-ci à faire la guerre. Cependant, ceci mena souvent à des disputes entre la Banque et le gouvernement. En dépit de cela ce mémoire démontrera que la Banque d’Angleterre s’identifiait comme faisant partie de l’État britannique et elle joua un rôle vital dans la victoire de la Guerre d’indépendance espagnole. III IV Acknowledgements This thesis would not have been possible without the help of many individuals. First and foremost, I wish to thank the ceaseless help of my supervisor, Prof. Brian Lewis, who has taught me since my first year of undergraduate study. His support and attention to detail were invaluable throughout the process and my writing has been all the better for his help. I would also like to thank a number of professors in the McGill Department of History who have influenced me throughout my time here. Professors Soske, Partner and Hoffmann have all taught me much about the art of writing history, and this thesis would be weaker if not for them. I would also like to extend my thanks to the department as a whole for providing me with funding, and to the support staff (especially Mitali Das) for guiding me through the MA process. Outside of the university, a number of academics have been very helpful. Professors George Grantham, Niall Ferguson, Larry Neal, Richard Roberts and James Taylor all provided me with help during my research and I would like to thank them for their suggestions and advice. I would also like to thank the staff at the Rothschild Archive in London (specifically Justin Cavernelis-Frost), the Bank of England Archive (specifically Clea Hodgson), the British Library and the National Archives, Kew. All of the archives were welcoming and the archivists made the research process far more productive than it would have been otherwise. My friends and family have also been invaluable for supporting me in this process. My three roommates, Josh, Colin and Greg, dealt with constant complaining and provided distraction and love throughout the year (and before). Special thanks must also go out to Brad, who proofread the entire thesis with me, despite having no interest in financial history. My mum and dad were V also deeply involved, both academically and emotionally. Without their continued support and help, this thesis would not have been written. Finally, this thesis is dedicated to my brother, Alex Rossiter, for putting up with an absent, and at times annoying, sibling. VI Section 1: Introduction – The Bank of England in the wars against France, 1792 – 1807. Between 1793 and 1815 Britain fought an almost uninterrupted war against France, first in the French Revolutionary Wars, and later in the Napoleonic Wars. The most important theatre for the British during these wars was the Iberian Peninsula, where Britain, Portugal and Spain fought against the French between 1807 and 1814. It was the one place where the British government deployed an army of considerable strength and size and the only place where the British Army managed to inflict meaningful defeats upon the French. The conflict marked the turning point in the war against France because Britain made the transition from a defensive and primarily maritime strategy to one that demanded a large commitment of soldiers to Europe. This war added considerably to Britain’s ever-increasing wartime debt, which had been mounting since the start of hostilities in 1793. The Bank of England was an institution that was fundamental to ensuring that this war did not ruin Britain financially. The Bank was not, however, simply an organ of the British government. It remained a legally independent entity, and its court of directors (the highest decision-making body in the Bank) had their own aims and goals, as well as legal obligations to the Bank’s shareholders. Despite this, a memorandum from the Bank succinctly demonstrates the relationship between the Bank and the state during the Peninsular War: [O]n the occasion of Lord Wellingtons [sic] glorious victory over the French near Salamanca there was an illumination for three nights…accordingly a double row lamps, a crown and a W hung with lamps (In that part of the front opposite Bank Street) were displayed in lieu of the patent lamps.1 1 Bank of England Archives (BEA), Accountant's Department: Chief Accountant's Personal Diary vol. 1 (1791- 1818), Aug 18. Under section ‘T’ 1 The Battle of Salamanca (July 22, 1812) was an important victory for the British. Wellington’s successful attack inflicted large number of casualties on the French and allowed British troops to liberate Madrid. The directors, like much of Britain, were undoubtedly pleased by this success. Yet the celebrations ran deeper than mere patriotism. By 1812, the Bank was fully immersed in Britain’s war effort, and a key part of the machine that was working towards victory. It also clearly saw itself as having a key role in securing the British victory as part of the British state. This thesis will assess the role of the Bank of England during the Peninsular War and demonstrate that it was self-consciously part of the victory over the French. The Peninsular War was by no means the first war in which the Bank had been invested. It had been set up in 1694 expressly to help William III fund his wars against France in the aftermath of the Glorious Revolution of 1688.2 Its founders were, as John Giuseppi put it, “members of the leading city livery companies, many were members of Parliament, many were directly associated with the government of the City – of the first twenty-six members of the Court of Directors, six subsequently became Lord Mayor.”3As the eighteenth century progressed, an increasing number of directors of the Bank also became members of Parliament.4 Thus the cornerstone of British wartime finance was political from its inception. Those who controlled the Bank were also willing to flex their political muscles. For example, the Bank tried to stop Queen Anne from sacking then Prime Minister Lord Godolphin, arguing this would ruin British public credit.5 The political leanings of the Bank were initially Whig.6 This was because while the 2 John Giuseppi, The Bank of England, a History from Its Foundation in 1694 (Chicago: H. Regnery Co., 1966), pp. 8-11 3 Ibid, p. 9 4 D. Stasavage, "Partisan Politics and Public Debt: The Importance of the 'Whig Supremacy' for Britain's Financial Revolution", European Review of Economic History European Review of Economic History 11, no. 1 (2007), p. 130 5 H. V. Bowen, "The Bank of England During the Long Eighteenth Century, 1694-1820" in The Bank of England: Money, Power, and Influence 1694-1994, ed. Richard Roberts and David Kynaston (Oxford: Clarendon Press, 1995), p. 7 6 Giuseppi, The Bank of England, a History from Its Foundation in 1694, p. 40 2 Whigs had been instrumental in creating the Bank, the Tory party had tried to dissolve it.7 Yet the overtly party-political nature of the Bank of England did not last. The eighteenth century instead saw the Bank focus on “profits and survival.”8 The General Court of Proprietors, made up of stock holders who owned a certain amount of stocks and voted on key decisions, lost its party-political edge. As the relationship between the government and the Bank stabilized, the directors took over the key decisions. Although the general court continued to meet it usually simply reaffirmed decisions already made by the directors.9 Yet although the Bank became less party-political, it became increasingly enmeshed in the British state. Between 1691 and 1740, the Bank (as well as the East India Company and the South Sea Company) provided the majority of funding for Britain’s wars, such as the War of the League of Augsburg and the War of the Spanish Succession.