History Of Bank Of England

Most current central banks are modeled after the Bank of England. The world's second-oldest central bank was founded in 1694 as the English government's banker and debt management and is currently one of the UK's bankers.

Stockholders held the bank from 1694 until 1946, when the Attlee cabinet nationalized it.In 1998, the Treasury Solicitor on behalf of the government bought it and made it an independent public organization with a mission to assist the government's economic goals but independence in price stability.As a statutory regulator, the bank became more responsible for UK financial stability in the 21st century.

The bank's headquarters have been in the City of London since 1694 and on Threadneedle Street since 1734. Some call it "The Old Lady of Threadneedle Street" after a 1797 James Gillray satire. The outer road intersection is Bank intersection.

The bank holds the UK's and 30 other nations' gold reserves.The bank owned 5,134 tonnes (5,659 tons) of gold worth £141 billion in April 2016. These calculations indicate that the vault may house 3% of the 171,300 tons of gold produced worldwide.

In 1690, the French Navy beat the Royal Navy in the Battle of Beachy Head, forcing William III of England's administration to panic. The English government wanted to rebuild the Royal Navy to compete with the French, but public funding and credit were limited. This shortage of credit prevented the English government from borrowing £1.5m to build the Royal Navy.

Paterson's plan proposed the government to create a fund to pay subscribers interest. The Tonnage Act 1694 ('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 volunt

In 1700, a group of merchants bought the Hollow Sword Blade Company to start a rival English bank (a "back door listing"). Early banking monopoly of the Bank of England ended in 1710. Sword Blade failed to fulfill its aim since it was revived.

The bank helped create and manage the national debt at this period. The bank was authorized to accept subscriptions for a government issuance of 5% annuities to generate £910,000 under the 1715 Ways and Means Act. This began the bank's management of Government Stocks, which allowed anyone to invest in government debt (before the Exchequer handled it directly). The Act required the bank to pay half-yearly dividends and maintain a log of all transactions, as it did for its Bank Stock.

The South Sea Company, founded in 1711, became a key rival to the Bank of England in 1720 by taking up some of the UK's national debt. Although the "South Sea Bubble" crisis followed, the business managed part of the UK national debt until 1853. Government lenders included the East India Company.

In 1734, the bank had 96 employees. The bank was rechartered in 1742 and 1764. The 1742 Act made the bank the only metropolitan joint-stock corporation entitled to issue bank notes.

In the second part of the 18th century, the bank purchased neighboring parcels of land to expand, and in 1765, its new architect Robert Taylor started adding additional structures. Taylor built a suite of rooms for the bank's directors north-west of the Pay Hall, overlooking St. Christopher's churchyard to the south.

The suite featured a new, larger Court Room and Committee Room.Taylor added stock and dividend management halls and offices east of the Pay Hall, doubling the bank's footprint to Bartholomew Lane.

In the 1820s, 'In each office under the several letters of the alphabet, are arranged the books on which the names of all persons having property in the funds are registered, as well as the particulars of their respective interests'. These rooms were centered on a large Rotunda, also known as the Brokers' Exchange, where Government Stock was traded.Instead of outside windows, these offices were top-lit.

In 1782, St Christopher le Stocks Church was destroyed, enabling the bank to expand west along Threadneedle Street. In 1786,

Taylor's new west wing, which matched his east wing, held the Reduced Annuities Office, Cheque Office, and Dividend Warrant Office. The old graveyard of St. Christopher le Stocks, now the 'Garden Court', was to the north. Taylor erected a four-story library north of Bullion Court to hold the bank's growing archives.

The Bank of England's first modern financial crisis was the 1772 credit crisis. When Alexander Fordyce went bankrupt, London went crazy.EIC received a loan from the Bank of England in August 1773. The drain on Bank of England reserves did not alleviate until late in the year.

George Washington was a bank stockholder during the American War of Independence because business was excellent.

The bank was the bankers' bank by its charter renewal in 1781, keeping enough gold to pay its notes on demand until 26 February 1797, when war had so depleted gold reserves that the government passed the Bank Restriction Act 1797 to prevent the bank from paying out in gold after an invasion scare caused by the Battle of Fishguard. The ban lasted until 1821.

A Corps of Bank Volunteers (450–500 men) was founded in 1798 during the French Revolutionary Wars to protect the bank against attack. It was dissolved in 1802, then reformed in 1803 during the Napoleonic Wars. The troops were taught to take the gold and silver from the vaults, currency printing machines, and key documents to a distant site in case of an attack. The Threadneedle Street armoury held their weapons and accessories. The Corps dissolved in 1814.

In the early 19th century, John Soane proposed extending the bank's premises north-west, rerouting Princes Street to establish the site's new western border.

The new building was filled with steam-powered presses for producing banknotes (notes were produced on site until the First World War, when the bank bought and turned St Luke's Hospital into its printing facilities). Before retiring in 1833, Soane rebuilt Taylor's east wing and rearranged Sampson and Taylor's street-facing façades to make the complex's perimeter cohesive.

In 1811, Thwaites & Co. installed a 'ingeniously contrived clock' above the Pay Hall that chimed the hours and quarters and remotely transmitted the time to dials in sixteen offices around the site via brass rods spanning 700 feet (210 m).

The 'panic of 1825' exposed the bank's three-way divided loyalties: to investors, the government (and the public), and commercial banking clients. The bank avoided a liquidity crisis in 1825–26 when Nathan Mayer Rothschild supplied it with gold, but several rural and provincial banks collapsed, resulting in many economic bankruptcies. The Country Bankers Act 1826 allowed the bank to open provincial branches to better distribute its banknotes (small country banks, some of which were undercapitalized, issued their own notes); by 1827, eight Bank of England branches had been established nationwide.

The Bank Charter Act 1844 restricted note issuance to gold reserves and granted the Bank of England exclusive powers to create banknotes in England. That privilege was kept by private banks if their headquarters were outside London and they posted security against their notes, but they were given inducements to renounce it. The last private bank in England to print its own notes was Wellington's Fox, Fowler, and Company bank, which grew swiftly until it amalgamated with Lloyds Bank in 1927. They were permitted until 1964.

A terrorist attack was attempted outside the Bank of England on April 4, 1913. Smoking and ready to detonate bombs were found near building railings.The Women's Social and Political Union (WSPU) set the device as part of their statewide suffragette bombing and arson campaign.

In one of the capital's busiest public avenues, the device was defused before it could explode, potentially saving civilian lives.The device was set the day after WSPU leader Emmeline Pankhurst was jailed to three years for attacking David Lloyd George's residence.At the City of London Police Museum, the milk churn bomb remnants are on exhibit.

Montagu Norman's leadership from 1920 to 1944 saw the bank actively shift away from commercial banking and toward central banking. Later Governor Robin Leigh-Pemberton called it 'a moment of fast transition, in which we started to move away from the clerical traditions of 200 years and to adopt specialization, mechanisation and contemporary management practices'.

The bank hired more economists and statisticians. Among its proposals for organizational reforms, the 'Peacock Committee' of 1931 recommended the employment of paid executive Directors. It also suggested reorganizing the bank's departments.

After the First World War, the bank's work grew, therefore it expanded. Herbert Baker completely reconstructed the bank's Threadneedle Street headquarters from 1925 and 1939. (Architectural historian Nikolaus Pevsner called the destruction of most of Sir John Soane's buildings "the greatest architectural crime, in the City of London, of the twentieth century").

It was difficult to keep Soane's banking halls behind the curtain wall, so they were dismantled and rebuilt in replica.Staff moved from one portion of the building to another (or to temporary housing near Finsbury Circus) during the demolition and restoration. Bullion and securities remained on site. Human bones from St Christopher le Stocks graveyard were excavated and reburied at Nunhead Cemetery during restoration.

Baker's steel-framed skyscraper has seven floors and three vault floors below ground. It has Charles Wheeler sculpture and bronze, Joseph Armitage plasterwork, and Boris Anrep mosaics. The bank is now Grade I listed.

At the start of World War II in 1939, the bank managed UK Exchange Controls.Germany forged nearly 10% of circulating Pound Sterling banknotes during WWII.

During the war, the bank's printing works (in Overton), accountant's department (in Hurstbourne Park), and other offices were transferred to Hampshire. The Directors and others at Threadneedle Street relocated to the basement vaults.

The Labour government nationalized the bank in 1946, soon after Montagu Norman's term. The number of Directors was decreased to sixteen (four full-time Executive Directors).

After 1945, the bank emphasized Keynesian economics, notably "easy money" and low interest rates to boost aggregate demand. It used credit and currency restrictions to combat inflation and sterling weakness and maintain a fixed exchange rate.

The huge Accountant's Department, which controlled the bank's holdings, returned to London from Hampshire after the war. However, the Exchange Control office had taken over its Threadneedle Street office. The department was housed again in Finsbury Circus until a new structure was built on a two-acre bombsite east of St. Paul's Cathedral. Victor Heal designed 'Bank of England New Change', London's largest post-war reconstruction project, which opened in 1957.

Along with office space, the new building included staff facilities and street-level retail spaces for various enterprises. The bank had a 200-year lease on the building, but computerization cut worker numbers in the 1980s and 90s, thus sections of it were leased to other enterprises, including Allen & Overy. It was destroyed in 2007 after the bank sold it in 2000. One New Change presently sits there.

With two of its hundred £1 shares, the bank established Bank of England Nominees Limited (BOEN), a now-defunct private limited company, in 1977. Its memorandum of association stated: "To act as Nominee or agent or attorney either solely or jointly with others, for any person or persons, partnership, company, corporation, government, state, organization, sovereign, province, authority, or public body, or any group or association of them". Edmund Dell, Secretary of State for Trade, exempted Bank of England Nominees Limited from Section 27 of the Companies Act 1976 because "it was considered undesirable that the disclosure requirements should apply to certain categories of shareholders".

The Bank of England is protected by royal charter and the Official Secrets Act. BOEN allowed governments and heads of state to invest in UK companies (with Secretary of State approval) if they agreed "not to influence the affairs of the company". BOEN became subject to corporation law disclosure obligations later. Dormancy does not prevent a corporation from becoming a nominee shareholder. BOEN had two shareholders: the Bank of England and its Secretary.

The reserve requirement for banks to retain a minimum set percentage of deposits with the Bank of England was eliminated in 1981. For additional information, go to Reserve requirement § United Kingdom. Nicholas Kaldor examined the Keynesian-Chicago economic shift in The Scourge of Monetarism.

The Liberal Democrats' 1992 general election economic program included turning over monetary power to the bank. In 1996, Conservative MP Nicholas Budgen introduced a private member's bill that failed because neither the government nor the opposition supported it.

HM Treasury spent £3 billion leaving the costly European Exchange Rate Mechanism in September 1992. This improved government-bank communication.

The bank's first government Inflation Report covered inflationary trends and pressures in 1993. An annual report is one of the bank's principal publications.The bank's openness has helped UK inflation targeting succeed. Many central banks have copied the Bank of England's Inflation Report, which has pioneered public information dissemination.

The bank turned 300 in 1994.