The First Nine Years of the Bank of England. an Enquiry Into a Weekly
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BOUGHT WITH THE INCOME FROM THE SAGE ENDOWMENT FUND THE GIFT OF 1891 -B-.-Bt-^-'S-B.-s: L'hf7./.G..f.a.^.. 3 1924 032 536 488 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924032536488 II THE FIRST NINE YEARS OF THE BANK OF ENGLAND THOROLD ROGERS Sontion HENRY FROWDE MACMILLAN AND CO. THE FIRST NINE YEARS OF THE BANK OF ENGLAND AN ENQUIRY INTO A WEEKLY EECORD OF THE PRICE OF BANK STOCK FROM AUGUST 17, 1694 TO SEPTEMBER 17, 1703 JAMES E. THOEOLD BOGEES .' • MERSES PROFVNLO ! PULCHRIOX EVENIT AT THE CLARENDON PRESS i^to §oxk MACMILLAN AND CO., 112 FOURTH AVENUE 1887 {_AU rights reserved'] PREFACE. Among the materials which I have collected for the fifth and sixth volumes of my History of Agriculture and Prices, is a weekly register of the price of Bank of England stock, from August 17, 1694, to September 17, 1703. The entries or quota- tions are taken from a statistical paper published by John Houghton, an apothecary who first lived near the Eoyal Exchange, and next in Gracechurch Street. Houghton's paper contains a short article on some matter of public interest in art or science or trade, a price Hst of corn and some other commodities, from many English market towns, and a number of adver- tisements. The sheet is continued till the date given above, when the proprietor of the paper informs his subscribers that his business has so increased that it is no longer in his power to afford the time necessary in order to enable him to digest the materials for his weekly publication. Houghton was the friend of many eminent persons in his day, notably of Halley the astronomer and physicist. He must have had a reputation of his own, for he was long a Fellow of vi Preface. the Eoyal Society, as well as a very active man of business. He is probably the person referred to in Bishop Sprat's account of the Eoyal Society as the tradesman whom the Society had elected, and for whose presence they thought fit to apologise to the King. Charles answered that he wished them to elect many such persons, if they were equally competent. It is probable that not half a dozen perfect copies of this remarkable work survive. Houghton's price lists had only an ephemeral interest. His weekly essays were indeed valued, and were reprinted long after his death, the editor of this part of the col- lections commenting on the excessive rarity of the sheets from which they were extracted. The Bodleian Library fortunately possesses a clean and perfect copy. It is contained in the great collection of newspapers given by the late Mr. Hope to the University. I make no doubt that the British Museum also possesses a copy, for I have seen allusions to Houghton's paper in a work called a History of Advertising. As some of the expressions used to designate the quotations of Bank stock were obscure, I enquired of my friend Mr. Henry Grenfell, one of the Directors of the Bank of England, whether I could get an authoritative explanation in that institution. But I found, on calling by his invitation at the Secretary's ofl&ce in the Bank, that the Bank had no knowledge Preface. vii of the price of its stock before 1 705, and I inferred that I had made a singular and curious discovery in Houghton. I determined therefore that the register should be published with a comment on it, because it supplies a blank in the history of the Bank of England, and indeed of the country, and this during the time that this great institution, and very much besides, were struggling for their very existence. This was especially the case through the critical years 1695,1 696 and 1 697. I felt that, if I could adequately comment on the facts, I should make no slight con- tribution to economical and financial history, and should besides throw some light on the political events which occurred during the last eight years of William the Third's reign, and the first year and a-half of Anne's. The most necessary materials for illustrating the facts are the Journals of the two Houses and the Statute-book for the period. The project of a public bank long preceded its adoption by Parliament as a protected corporation. Thus, for instance, in the beginning of the year 1658 John Lambe, a London merchant, drew up the scheme of a bank which he submitted to Oliver, then Lord Protector. But the confusion which followed on Cromwell's death in the same year prevented any steps being taken with the project, if indeed it was seriously entertained. Then, towards the latter end of Charles's reign, the importance of establishing a viii Preface. bank in London, with branches in the largest towns, was seriously discussed. Some writers suggested that the bank should be under the management of the corporation of the City, who should certify to its credit, in imitation of the Bank of Amsterdam. Others would have grafted it on one or the other of the Companies which were then in existence and were carrying on domestic manufactures and trade, just as, long after this time, one of the Scotch banks was based on a manufacturing company, and still bears the name of the British Linen Company. All persons indeed who were engaged in business were alive to the possibility of circulating credit. They had become familiar, in the City at least, with such expedients by the circulation of goldsmiths' notes. The difficulty was to find a security strong enough to be trusted, and strong enough to be safe. Now the goldsmith did not always satisfy the first con- dition, for we are told that London merchants and others had lost from two to three millions^ through the bankruptcy of goldsmiths, and the experiences which had been endured in consequence of the action of the Grovernment must have made it manifest that nothing but a really popular Government could give adequate security to paper credit. Objectors were not far wrong who said that a bank was incon- sistent with monarchy, if by that they meant an absolute one. ^ A Short Account of the Bank of England, 1695. ; Preface. Ix But even more important than these notices is Nar- cissus Luttrell's Diary, a work preserved in All Souls College Library. This collection was first used by Macaulay for his History. It contains all the current information which the writer could pick Up and chronicle, between 1678 and 1714. The work was printed by the Oxford University Press at Macaulay's instance, and is simply invaluable for English history and English opinion during the time which it covers. LuttreU. appears to have been a moderate Whig but there is little direct political bias discoverable in his diary. He frequently gives the price of Bank stock, and I have incorporated his figures in the text below. Many of these prices, I have reason to believe, are time bargains, and not bona fide sales and transfers of stock, as I believe Houghton's are. Houghton's collections contain not only the price of Bank stock, but those of many other funds, or actions as they were then called. Of these the most interesting are the prices of stock in the two East India Companies, the African Company, and the Hudson's Bay Company, and I have taken occasion from time to time to compare the fluctuations of East India Company's stock with that of the Bank. Houghton gives also the rate of exchange, especially with Amsterdam, then the centre of European finance. I have been able to interpret this rate, essential in order to comprehend the troubles of the Bank, in the three important years referred to, from the rare X Preface. and valuable work of Justice (1707) on the foreign exchanges. I have procured, also from Houghton's pages, the five Advertisements of Chamberlain's Land Bank, a project which, concurrentlj with other causes, gave that great shock to credit in 1696-7 which nearly destroyed the Bank, and all credit with it. The next source of contemporaneous information is to be found in the pamphlets of the time. These pamphlets are to the age in which they were written what articles and essays in financial papers are at the present time, except perhaps that they were more carefully composed, because they had to discuss very disputable subjects in very critical times, and were frequently quoted years after they were written. I think I may say, that they entirely exhaust the contemporary aspect of the subject. They are generally anonymous, but the authorship of some has been revealed. Most are in the in- terest of the Bank of England, though some of them contain sharp but friendly criticisms on its action. At the same time there are two or three others which advocate the cause of the Land Bank. One of these is I think written by Foley, some time Speaker of the House of Commons, who with Harley, long time Speaker, and afterwards Earl of Oxford, was a patron of Chamberlain's absurdities. A few are written by foes of the new institution. In dealing with political events, which at an early Preface. xi date affected Bank stock, especially after the Peace of Eyswick, I have mainly and continuously relied on Sismondi's Histoire des Fran(;;ais, the best and fairest History which as I think has ever been written.