Page:The Bank of England and the State, 1905.djvu/16

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The Bank of England and the State.

of this man, it may be observed in passing, showed itself in other directions, for the closing years of his life, after the severance of his connection with the Bank, were devoted to efforts for forming a settlement on the Isthmus of Panama, the importance of which he recognised, an enterprise, the Darien Scheme as it was called, in which he lost his fortune, as happened some two centuries later to other pioneers in the same direction.

With the origin of the Bank, the origin of the Funded National Debt may also be said to have coincided: for until then advances to the Government, although frequent, had only been made for Hxed and comparatively short periods. For a considerable time the capital of the Bank seems to have been equal to, and regulated by, the amount of its advances to the Government. Thus, the original capital—£1,200,000—was the exact amount advanced, (at the rate of 8 per cent. plus £4,000 per annum for management, or, a round sum of £100,000 per annum). No exclusive banking privileges were at that time granted to the Bank. The Act enabled the Company to deal in bullion and bills, to issue notes, and to make advances on merchandise, but it was forbidden to trade in its own securities, nor was it allowed to borrow above £1,200,000 except upon Parliament Funds; and it was expressly stipulated that if the Company should borrow more, every member was to be personally liable; a stipulation which does not appear to have prevented the Bank from immediately exceeding the fixed limit, for in an account delivered to the House of Commons in 1696 their liabilites are stated[1] as follows:—

To sealed bills outstanding £893,800 0 0
To notes for running cash 764,196 10 0
To money borrowed in Holland 300,000 0 0
To interest due on bank bills outstanding 17,876 0 0
Total £1,975,872 10 0

Troubled indeed were the early days of the Bank, for competition was threatened by another bank, the Land Bank, for which a Charter was granted, but which failed to obtain

  1. Fairman’s Account of the Public Funds, 1824.