Editing Bank of England (section)

===Founding===
[[File:Running Cash Note - Bank of England Museum - Joy of Museums.jpg|thumb|right|Handwritten banknote dated 1697, signed 'for the Governor and Company of the Bank of England' by 2nd Cashier Robert Hedges]]

During the [[Nine Years' War]], the [[Royal Navy]] was defeated by the [[French Navy]] in the 1690 [[Battle of Beachy Head (1690)|Battle of Beachy Head]], causing consternation in the government of [[William III of England]]. The English government decided to rebuild the Royal Navy into a force that was capable of challenging the French on equal terms; however, their ability to do so was hampered both by a lack of available public funds and the government's low credit. This lack of credit made it impossible for the English government to borrow the £1.5m that it wanted to use to expand the Royal Navy.<ref>{{Cite journal |last=Nichols |first=Glenn O. |date=1971 |title=English Government Borrowing, 1660–1688 |journal=Journal of British Studies |volume=10 |issue=2 |pages=83–104 |doi=10.1086/385611 |issn=0021-9371 |jstor=175350 |s2cid=145365370}}</ref>

====Concept====

In 1691, [[William Paterson (banker)|William Paterson]] had proposed establishing a national bank as a means of bolstering public finances.<ref>{{Cite book |url=https://books.google.com/books?id=EkUTaZofJYEC&q=British+Parliamentary+reports+on+international+finance |title=British Parliamentary Reports on International Finance: The Cunliffe Committee and the Macmillan Committee Reports |date=1 January 1979 |publisher=Arno Press |isbn=9780405112126 |quote=Its foundation in 1694 arose out the difficulties of the Government of the day in securing subscriptions to State loans. Its primary purpose was to raise and lend money to the State and in consideration of this service it received under its Charter and various Act of Parliament, certain privileges of issuing bank notes. The corporation commenced, with an assured life of twelve years after which the Government had the right to annul its Charter on giving one year's notice. Subsequent extensions of this period coincided generally with the grant of additional loans to the State. |access-date=10 May 2010 |archive-url=https://web.archive.org/web/20210426203717/https://books.google.com/books?id=EkUTaZofJYEC&q=British+Parliamentary+reports+on+international+finance |archive-date=26 April 2021 |url-status=live}}</ref> As he later wrote in his pamphlet ''A Brief Account of the Intended Bank of England'' (1694): {{blockquote|"...it was proposed some years ago that a publick transferrable Fund of Interest should be established by Parliament, and made convenient for the Receipts and Payments in and about the Cities of London and Westminster; and to constitute a Society of Money'd Men for the government thereof, who should be induced by their Interest to exchange for Money the Assignments upon the Fund, at every demand".<ref name="PatersonGodfrey1694">{{cite book |last1=Paterson |first1=William |last2=Godfrey |first2=Michael |title=A BRIEF ACCOUNT Of the Intended Bank of England |date=1694 |publisher=Randal Taylor |location=London |url=https://quod.lib.umich.edu/e/eebo/A56581.0001.001/1:2?rgn=div1;view=fulltext# |access-date=11 January 2024}}</ref>}} While his scheme was not immediately acted upon, it did provide the basis for the bank's first Charter and the legislation which made its establishment possible.<ref name="BoEHistFun" />

Two other key figures in the bank's creation were [[Charles Montagu, 1st Earl of Halifax|Charles Montagu]], the Member of Parliament for Maldon, who played a crucial role in steering the proposals through Parliament (and was afterwards appointed [[Chancellor of the Exchequer]]); and [[Michael Godfrey]], who helped persuade City financiers of its benefits (and was subsequently chosen to be the bank's first Deputy Governor).<ref name="BoEHistFun" />

It has also been claimed (by [[W. R. Scott (economist)|W. R. Scott]], among others)<ref name="BR54">{{cite book |last1=Baker |first1=Emerson W. |last2=Reid |first2=John G. |title=The New England Knight: Sir William Phips, 1651–1695 |publisher=University of Toronto Press |year=1998 |location=Toronto |isbn=978-0-8020-0925-8 |oclc=222435560 |url=https://archive.org/details/newenglandknight00bake }}</ref> that [[William Phips]] played a timely, if incidental, role: his successful expedition to retrieve booty from a sunken Spanish [[galleon]] (the ''[[Nuestra Señora de la Concepción]]'') helped create an ideal market for the bank's foundation: flooding the market with bullion and creating an enthusiasm for [[Joint-stock company|joint-stock]] ventures.<ref>{{Cite web |last=Parker |first=Martin |date=2016-03-04 |title=How stolen treasure kick-started the Bank of England |url=http://theconversation.com/how-stolen-treasure-kick-started-the-bank-of-england-55607 |access-date=2023-07-27 |website=The Conversation |language=en}}</ref>

====Legislation====
[[File:Charles Montagu, 1st Earl of Halifax by Sir Godfrey Kneller, Bt.jpg|thumb|right|Charles Montagu played a key role in devising the legislation for establishing the Bank and steering it through the House of Commons.]]
Paterson's proposal required the Government to set up a fund from which [[interest]] would be paid to the subscribers. It was decided that this would be provided for by income from [[Tonnage and poundage|tonnage]], and certain other shipping [[Duty (tax)|duties]] routinely levied by HM [[Exchequer]]; therefore Parliament approved the bank's establishment by means of the [[Tonnage Act 1694]]<ref>H. Roseveare (1991). ''The Financial Revolution 1660–1760''. Longman. p. 34.</ref> ('An Act for granting to theire Majesties severall Rates and Duties upon Tunnage of Shipps and Vessells and upon Beere Ale and other Liquors for secureing certaine Recompenses and Advantages in the said Act mentioned to such Persons as shall voluntarily advance the summe of Fifteen hundred thousand Pounds towards the carrying on the Warr against France').<ref name="BankAct1694">{{cite book |editor1-last=Raithby |editor1-first=John |title=Statutes of the Realm: Volume 6, 1685-94 |date=1819 |publisher=Great Britain Record Commission |location=London |pages=483–495 |url=https://www.british-history.ac.uk/statutes-realm/vol6/pp483-495 |access-date=23 January 2024}}</ref>

To induce subscription to the loan, the subscribers were to be [[Incorporation (business)|incorporated]] by the name of the '''Governor and Company of the Bank of England'''. Public finances were in such dire condition at the time<ref>{{Cite book |last=Hendrickson |first=Kenneth E. III |url=https://books.google.com/books?id=EdwsCgAAQBAJ&q=dire+condition+of+public+finance+1694&pg=PA63 |title=The Encyclopedia of the Industrial Revolution in World History |date=2014-11-25 |publisher=[[Rowman & Littlefield]] |isbn=9780810888883 |access-date=15 October 2020 |archive-url=https://web.archive.org/web/20210202060409/https://books.google.com/books?id=EdwsCgAAQBAJ&q=dire+condition+of+public+finance+1694&pg=PA63 |archive-date=2 February 2021 |url-status=live}}</ref> that the terms of the loan (as laid down in the Act of Parliament) were that it was to be serviced at a rate of 8% per annum; there was also a service charge of £4,000 per annum payable to the bank for the management of the loan.

The Act limited the subscribers' investment to a maximum of £10,000 each in the first instance, and £1,200,000 in total (it was envisaged that the Exchequer would raise the remaining £300,000 through other forms of borrowing).<ref name="BankAct1694" />

====Incorporation====
[[File:Bank of England Charter sealing 1694.jpg|thumb|right|''Sealing of the Bank of England Charter (1694)'', by Lady Jane Lindsay, 1905]]
The [[royal charter]] of the Bank of England was granted on 27 July 1694, three months after the passing of the Act.{{citation needed|date=July 2024}}

In the end the £1.2 million was raised in 12 days; 1,268 people subscribed. Their holdings were known as Bank Stock (Bank Stock continued to be held in private ownership until 1946 when the Bank of England was nationalised).<ref>{{cite web |title=Index to Original Subscribers to Bank Stock 1694 |url=https://www.bankofengland.co.uk/archive/index-to-original-subscribers-to-bank-stock-1694 |website=Bank of England Archive |access-date=5 January 2024}}</ref> The majority of the original subscribers were of 'the [[mercantile]] middle classes of London' (though [[tradesmen]] and [[artisans]] also subscribed).<ref name="Kynaston2017" /> Most (more than two-thirds) contributed less than £1,000. As a proportion of the total amount raised, 25% came from '[[esquire]]s', 21% from merchants and 15% from titled [[aristocrats]]. Twelve per cent of the original subscribers were women.<ref name="Kynaston2017" /> [[William and Mary of England|King William and Queen Mary]] (jointly) invested £10,000, the maximum permitted sum, as did a handful of others (including Sir [[John Houblon]]).<ref>{{cite web |title=Index to the Book of the Subscriptions 1694 |url=https://www.bankofengland.co.uk/-/media/boe/files/archive/original-bank-subscribers/1694.pdf |website=Bank of England |access-date=27 January 2024}}</ref>

Investment in the navy duly took place. As a side effect, the huge industrial effort needed (including establishing [[ironworks]] to make more nails and advances{{Clarify|date=February 2016}} in agriculture feeding the quadrupled strength of the navy) started to transform the economy. This helped the new [[Kingdom of Great Britain]] – [[Acts of Union 1707|England and Scotland were formally united in 1707]] – to become powerful. The power of the [[Royal Navy]] made Britain the dominant world power in the late 18th and early 19th centuries.<ref>{{Cite AV media |url=https://www.youtube.com/watch?v=-jqDMmWhPHA |title=Empire of the Seas |publisher=BBC |access-date=10 May 2010 |archive-url=https://web.archive.org/web/20191220124600/https://www.youtube.com/watch?v=-jqDMmWhPHA&gl=US&hl=en&has_verified=1&bpctr=9999999999 |archive-date=20 December 2019 |url-status=live}}</ref>

====Governance====
The first Governor of the bank was [[John Houblon]], and the first Deputy Governor [[Michael Godfrey]]. (330 years later, in 1994, the bank would issue a [[Bank of England £50 note|£50 note]] depicting Houblon to mark its [[tercentenary]].)<ref>{{Cite ODNB |title=Houblon, Sir John (1632–1712), merchant |url=https://www.oxforddnb.com/display/10.1093/ref:odnb/9780198614128.001.0001/odnb-9780198614128-e-13861 |access-date=2022-12-17 | year=2004 |language=en |doi=10.1093/ref:odnb/13861| last1=Roseveare | first1=H. G. }}</ref>

[[File:Running Cash Note - Bank of England Museum - Joy of Museums - 2.jpg|thumb|right|An early Bank of England note, with [[Britannia]] emblem, signed by the Chief Cashier, [[Thomas Madockes]], and dated 1699]]
Governance was vested in the Governor, his Deputy and a 'Court' of 24 Directors (most of whom were [[merchant banker]]s recruited from the City); the Directors were elected annually by a 'General Court' of all the Bank's registered stockholders (collectively known as 'the Proprietors'). The [[Company seal|common seal]] of the Court of Directors, adopted on 30 July 1694, depicted '[[Britannia]] sitting and looking on a Bank of mony'; Britannia has been the bank's emblem ever since.<ref>{{cite web |title=Britannia and the Bank (1962) |url=https://www.bankofengland.co.uk/-/media/boe/files/archive/publications/britannia-and-the-bank.pdf |website=Bank of England |access-date=2 February 2024}}</ref> 

The Court appointed three senior officers who, alongside the Governor and Deputy Governor, were responsible for its day-to-day running of the bank: the Secretary and Sollicitor, the First Accomptant and the First Cashier. (Their successors, the Secretary, Chief Accountant and [[Chief Cashier of the Bank of England|Chief Cashier]], continued to head up the main divisions of the bank's operations for the next 250 years: the Chief Cashier and the Chief Accountant had oversight of the 'cash side' and the 'stock side' of the bank, respectively, while the Secretary oversaw its internal administration.)<ref name="Hennessy1992" />

Besides these officers, the bank in 1694 was staffed by seventeen clerks and two doorkeepers.<ref name="BoEHistFun">{{cite book |title=The Bank of England: History and Functions |date=1970 |publisher=Bank of England |location=London |url=https://www.bankofengland.co.uk/-/media/boe/files/archive/publications/history-and-functions.pdf}}</ref>

====Premises====
The bank initially did not have its own building, first opening on 1 August 1694 in [[Mercers' Hall]] on [[Cheapside]]. This however was found to be too small and from 31 December 1694 the bank operated from [[Grocers' Hall]] (located then on [[Poultry, London|Poultry]]), where it would remain for almost 40 years.<ref name ="BoE1794-1984">{{Cite book |url=https://www.bankofengland.co.uk/-/media/boe/files/archive/publications/the-bank-1734-1984.pdf |title=Bank of England 1734–1984 |publisher=Bank of England Archive |pages=2–4}}</ref> (Houblon had served as Master of the [[Grocers' Company]] in 1690–1691.)<ref name="BoEHistFun" />

====Operation====
The Act of Parliament prohibited the bank from trading in goods or merchandise of any kind, though it was allowed to deal in gold and silver [[bullion]], and in [[bills of exchange]].<ref name="Allen1828" /> Before very long, the bank was maximising its profits by issuing [[banknotes]], taking [[deposits]] and lending on [[mortgages]].<ref name="Kynaston2017" />

In its early days the bank made significant losses, not least by accepting [[Coin clipping|clipped coins]] in exchange for its banknotes.<ref name="Allen1828" /> The establishment of a Land Bank (by [[John Asgill]] and [[Nicholas Barbon]]) in 1695, and a currency shortage occasioned by the [[Great Recoinage of 1696]], both threatened the bank's position;<ref name="BoEHistFun" /> but Parliament intervened, passing [[Bank of England Act 1696|another Act]] that year, which authorised the bank to increase its capital to over £2.2 million through the enlarging of its stock by new subscriptions.<ref>{{cite book |editor1-last=Raithby |editor1-first=John |title=Statutes of the Realm: Volume 7, 1695-1701 |date=1820 |publisher=Great Britain Record Commission |location=London |pages=218–238 |url=https://www.british-history.ac.uk/statutes-realm/vol7/pp218-238 |access-date=29 January 2024}}</ref>