A Brief History of the Bank of England

When established by William Paterson, Bank of England was nothing more than a small organization consisting of 20 people.

Fifteen years after the bank was established, the British government had to borrow heavily from Bank of England to finance a series of wars. In return, the Bank of England received a monopoly in the banking industry.

Provinces outside London remained without formal banking facilities since Bank of England established no branches and “its banknotes did not circulate outside London.” (Cameron, 169).

The Royal Mint, where the money was produced, was extremely inefficient. That caused the establishment of so called “country banks”. Any bank located outside of London served the needs of local monetary circulation. Country banks became so popular that by “1810 there were almost 800 of them (Cameron, 169).

However, by the late 1700s the Bank of England gradually emerged as the guardian of the money supply, which greatly increased the Bank’s prestige.

In the early 1900s, the Bank of England became the instrument of the ruling class. It could lower prices and wages, increase unemployment and even correct the price of gold!

Here are a few links of interest:

http://www.bankofengland.co.uk/index.htm - Bank of England Homepage

http://www.bankofengland.co.uk/museum/funny.htm - Funny stories from the Bank’s past

http://www.bankofengland.co.uk/mus_arch.htm - Bank of England Museum

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The British Empire