Till Time's Last Sand

by David Kynaston

  What, then, was the relationship, if any, between the Bank’s note issue on the one hand and its ‘cash’ (that is, gold) holding on the other? ‘Is it now, or was it ever your Understanding or Opinion, that the Bank of England, kept Cash equal, or nearly equal, to the Amount of the Sums secured by all the Bank Notes in Circulation?’ a parliamentary inquiry in the 1790s asked Samuel Hoare, a prominent London banker who was also a shareholder in the Bank of England. ‘No,’ answered Hoare. ‘My opinion is, that they generally preserved a Proportion, as 3 to 5, that is, if they had three Millions Sterling they might Issue five Millions Paper in Times of Security.’ Responding to the same inquiry, a Bank director and former governor, Samuel Bosanquet, reflected something of the strain involved, noting that ‘it is possible for the Bank to be in a much safer Situation, with a much smaller Sum in Specie when Public Affairs are prosperous, than with a much larger Sum and an apprehension that that Sum is draining away’. And: ‘Whenever there is an Influx of Bullion into the Country, the Bank have nothing to fear; when a Drain takes place from the Country, is in general the Period for them to be alarmed.’ The sense of apprehension was eloquent, and Clapham reckons that towards the end of the century anxiety usually set in when the Bank’s gold reserves fell significantly below £5 million, out of a national bullion stock of perhaps £15–20 million. Given which, a reply in the affirmative might have been expected when the inquiry asked the governor of the day, Daniel Giles, whether the Bank had ‘any system of measures’ for acquiring bullion. Instead, Giles merely replied: ‘When it is advantageous to bring it in, individuals will bring it.’ Or, as Clapham comments, that was a remark exemplifying what had become ‘the established policy of letting external forces play on the Bank rather than attempting to guide them’.10 No doubt there was the occasional exception – not least the vigorous response to the 1763 crisis – but the broader truth seems to hold.

  That response in 1763 had taken the form of liberal discounting (buying) of bills, and indeed it was particularly from the 1760s that the Bank’s discount business really grew as a core and increasingly profitable activity that at the same time was invaluable to the functioning of the City. ‘As a general rule,’ notes Clapham, ‘it felt bound to oblige anyone – any business person that is – introduced by a Director [of the Bank] and offering paper with “two good London names” on it. It might show reluctance to do business with particular firms for precise reasons, and it never dealt in very long-dated bills; but apart from that it was open-handed … the greatest and most accessible haven of refuge for storm-tossed traders and, at the last, bankers also.’ So, a much appreciated, indeed indispensable, ‘haven of refuge’, offering short-term credit (usually thirty or sixty days) at 5 per cent (for most of the century the legal maximum rate of interest). Even so, Clapham’s phrase about ‘particular firms for precise reasons’ is also suggestive. Here the key witness is Sir Francis Baring, as a young man the founder in 1763 of what became the prestigious merchant bank Baring Brothers & Co, and on his death in 1810 described as ‘unquestionably the first merchant in Europe’. Towards the end of his life, he recalled how ‘before the Revolution [of 1789 in France] our Bank (of England) was the centre upon which all credit and circulation depended, and it was at that time in the power of the Bank to affect the credit of individuals in a very great degree of refusing their paper’. Who had their paper refused? Presumably it could be a range of people and firms, for a range of reasons, but the historian Stanley Chapman has no hesitation in making a key identification. ‘Through the eighteenth century,’ he observes in his history of the highly successful Raphael banking-cum-stockbroking family, ‘the Bank of England stood at the apex of commercial credit in England and world trade, and the Bank’s directors were known to be anti-Semitic. There was no secret about this; it was a recognised feature of their policy.’11 Almost certainly he is right. A degree of anti-Semitism – perhaps never virulent, but seldom entirely absent – would be an integral part of the Bank’s culture for its first two and a half centuries, and arguably even a little longer.

  What else did the Bank do (or not do)? The other main activity was private loans, prior to the 1760s usually producing an income greater than that from discounting. Importantly, these loans were neither to small businesses nor to fund the embryonic Industrial Revolution. Rather, as Clapham explains: ‘Described as private, the chief of these loans were really of a semi-public character. Very few names of individual borrowers are to be found in the Court Books in normal times. The great borrower was, as it always had been, the East India Company …’ Other regular loans, sometimes indeed in the form of running loans, were to the South Sea Company, the Hudson’s Bay Company and the Royal Bank of Scotland. By contrast, in terms of another potential area of business, the Bank by the late eighteenth century seems to have been still some way from having made itself into the automatic banker’s bank. ‘Only a minority, and a rather small minority at that, of the London bankers certainly had drawing accounts in Threadneedle Street in 1774,’ notes Clapham, adding that ‘not quite half had such accounts in 1794’. That development awaited. Yet, taking the Bank’s activities as a whole during its formative Threadneedle Street decades, the Scottish economist Adam Smith was surely justified in reaching in 1776 his celebrated verdict – a verdict that pointed clear-sightedly to how the institution’s future would ultimately lie in the public rather than the private realm. After calling the Bank ‘the greatest bank of circulation in Europe’, he went on in his seminal An Inquiry into the Nature and Causes of the Wealth of Nations:

  The stability of the bank of England is equal to that of the British government. All that it has advanced to the publick must be lost before its creditors can sustain any loss. No other banking company in England can be established by act of parliament, or can consist of more than six members. It acts, not only as an ordinary bank, but as a great engine of state.12

  What about the directors themselves? Thanks to the diligence of W. Marston Acres, whose findings appeared in Notes and Queries during the darkest days of the Second World War, we know something – though in some cases not very much – about each of the 133 men who were directors of the Bank at some stage between 1735 and 1792 inclusive. Their average age on becoming a director was 43.9 years old, with the youngest being 25, the oldest 77; if they became governor, the average age on attaining that office was 56.7, with the youngest being 40, the oldest 71; and the average length of time between becoming a director and finally stopping being a director was 19.7 years, with those lengths varying between one year or less and 56 years. As for occupation, this is identified by Acres for just over half of them, with fifty-six being merchants, while among the other eleven, three were bankers, one was an ironmaster, one was a barrister, one was a wholesale grocer and one was a Blackwall Hall factor. So far so more or less predictable, but fortunately it is possible, on the basis of Acres and other sources, to flesh out the picture further.

  Inevitably, family connections and influence continued to be strong, though no single family quite matched the example of the Houblons from the Bank’s pioneering era. Take three families: the Rapers, the Thellussons and the Thorntons. Matthew and Moses Raper were the two sons of Matthew Raper, an ironmonger who was himself briefly a director of the Bank in the 1710s. The younger son Moses was a silk merchant, became a Bank director in 1716 in his mid-thirties, left the Court in 1742 and on his death six years later was president of Guy’s Hospital; his brother Matthew became a director in 1730 in his mid-fifties and died in harness in 1748, having made perhaps his biggest mark on public life as treasurer of the Unitarian Chapel in Newington Green. For the Thellussons, it was not just family but a whole intricate network around them. Peter Thellusson came to London from Paris as a young man in the early 1760s, established a highly successful merchanting business, and was closely linked with his fellow-Huguenot Martyn Fonnereau (a director 1771–83 and himself the grandson of a director) in the victualling of the garrison at Gibraltar; while Peter’s eldes
t son Peter Isaac grew up in his father’s business and was elected a director in 1787 in his mid-twenties, having four years earlier married Elizabeth Cornwall, daughter of a former Bank director (John Cornwall) and cousin of a clutch of Thorntons, all of them present or future directors. The Thorntons themselves were seemingly ubiquitous. Robert Thornton, ‘a merchant of London and of Clapham’ (Acres), was the eldest son of a Hull merchant and served as a director from 1732 until his death at the start of 1748; later that year, his younger brother Godfrey, likewise a merchant, became a director, before his own death in 1752; Godfrey’s third son, also Godfrey, was elected a director in 1772 and in due course governor; and from 1780 another Thornton director (and future governor) was his cousin Samuel – born in 1754, eldest son of the remarkable merchant John Thornton (a founder of the evangelical movement and said on his death in 1790 to have been the second richest man in Europe), and himself a partner in the family firm from 1776, allotted a one-third share of his father’s profits.

  Of course, the larger question remains. Was the Bank directorate, as it evolved through the eighteenth century, a broadly ‘open’ or a broadly ‘closed’ body of men? Certainly it was closed to Jews, notwithstanding their increasing importance in the City, as exemplified by Samson Gideon; more generally, Daniel Abramson has offered an unflattering picture of a Court that by the end of the century ‘no longer consisted of ambitious, daring, new City of London men’, but instead ‘represented the City’s oligarchic establishment’, as ‘webs of inter-marriage conserved wealth and status within a limited circle of families’.13 That verdict may be a little harsh, underestimating the quality as well as sense of duty of some of the individual directors, yet it is probably fair enough about the rather ossifying direction of travel.

  What about, though, these Bank men and society at large? Here, Abramson’s claim that ‘from being the embodiment of dynamic capitalist innovation, the Bank of England’s directorate evolved into almost a quasi-aristocratic backwater’ is surely a stretch, at least as far as the period up to the 1790s is concerned. Undoubtedly ‘money’ and ‘land’ were moving closer together during the eighteenth century, though often experiencing a chequered, fractured sort of relationship; but analysis of the 133 directors suggests that there was still a certain distance between the two. Take the question of whom the directors married. Of the twenty-three for whom we have reasonably precise information, eleven married into the London business world (the daughter of a London merchant, the daughter of a London haberdasher, the daughter of a ‘citizen and vintner of London’, and so on), compared to only six marrying into what seem to have been gentry-cum-aristocratic families (the daughter of the first Earl of Scarborough, the daughter of Henry Thompson of Kirby Hall, Yorkshire, and so on). Moreover, most of the missing 110 were far likelier to have married into the former category than the latter. Or take the question of where the directors lived. Undeniably there was the occasional flavour of country house and rolling acres (Lilling Hall, Yorkshire or Waltham Place, Berkshire or Spondon, Derbyshire or Thorpe, Norfolk); but much more common was a prosperous suburban or quasi-suburban location (Fleetwood House, Stoke Newington or Wall Street, Hackney or Dacre House, Lee or unspecified residences at such places as Clapham, East Sheen, Richmond, Highgate and Hendon).14

  Nor, in terms of exercising a broader sway, did many directors become MPs: only fifteen out of the 133 did so. However, a man from the Bank was sometimes just what the government of the day – or, more specifically, the Treasury – badly needed in order to boost its financial authority and expertise. In April 1759 the senior secretary to the Treasury, James West, sent his chief, the Duke of Newcastle, a briefing note on possible City candidates for the vacant Cornish seat of Camelford. They included two Bank directors, Charles Savage (a former governor) and Bartholomew Burton (the current deputy governor). Savage, alas, had ‘no inclination to come into Parliament, and tho’ a good Whig and very rich, has peevishness and singularity in many things to a high degree’; instead, the choice ultimately fell on Burton, ‘a very good sensible man’, albeit ‘I do not think of any great weight in the City’. Probably a more substantial Bank MP was William Ewer, a Turkey merchant who became a director in 1763 and governor in 1781, while sitting for Dorchester between 1765 and his death in 1789. He is recorded as subscribing during the 1770s very large sums to government loans; and in his final Commons speech, in May 1788, he presented a petition of London merchants exalting the national benefits derived from the slave trade.15

  A happier remembrance is those directors with a rich hinterland. James Theobald, for instance, was a substantial timber merchant and a director from 1743 to 1756; but his passions were his multifaceted activities as a natural historian and his leading role in the Royal Society, ‘generously contributing’ (in a biographer’s words) to its ‘knowledge and activities for over 33 years’. The passions of Gustavus Brander, who spent much of his life as a merchant operating out of White Lion Court, Cornhill, are caught in his 1787 obituary in the Gentleman’s Magazine. Describing him as ‘a very considerable Bank-stock-holder’, it went on: ‘He was for several years [1761–79] a Director of the Bank; but, having inherited the accumulated fortune of his uncle Mr. Speaker, he indulged his favourite pursuits in literature and the fine arts.’ And it cited as a particularly notable acquisition ‘the magnificent chair in which the first emperors of Germany used to be crowned’. The truly systematic acquirer, though, was Lyde Browne, a prosperous Foster Lane merchant and silver refiner who was a director between 1768 and his death in 1787. One of the age’s most assiduous pursuers of antique sculpture, gathered together about 200 strong at his home (Cannizaro House in Wimbledon), he eventually sold much of his collection to Catherine the Great. Yet for Ruth Guilding, author of a recent authoritative study of the collectors of antique sculpture, he is a far from admirable figure. Calling Browne ‘a businessman in antiquary’s clothing’, she writes of how he ‘joined the ranks of the connoisseurs and boasted of the antique sculptures housed in his museum at Wimbledon, but then traded them like the merchant that he was’ – an ‘easy, mercenary attitude’ that ‘challenged the whole idea of connoisseurship’. And she quotes as self-condemnatory his frank observation: ‘All Virtu will be bought in future for present enjoyment, and to be parted with when satiated with the possession thereof.’

  Every now and then, the authentic voice of the typical City man – commonsensical, sceptical, unassuming, prosaic, pragmatic – comes through loud and clear. Charles Palmer was a merchant who became a director in 1739, then governor in 1754, and left the Court in 1763, retiring to Pinner. But he maintained close links with the Bank, writing regularly over the next few years to a trusted senior clerk, Thomas Hulley. A few extracts from the letters speak of an almost timeless sensibility. On the formation of the Rockingham government:

  As to this great revolution in the Ministry and the further changes that may be expected to be made, I do not trouble myself much about them. The late outs are now the inns and will do all they can to keep themselves where they are, and those they have outed will do their utmost to pay them in their own coin, and thus our political affairs are likely to go, and have gone, all my time, and I see no likelihood of its being otherwise.

  On Rockingham’s fall a year later:

  I am obliged for your news of a new Administration. I do not find that it is quite settled yet, but I suppose it must be soon. A state of uncertainty is a bad one on all accounts, both public and private.

  On the press:

  I long to hear news that I may make some sort of dependence upon, for I have not been in the way lately of hearing anything but what the newspapers tell me, and that does not go for much with me.

  On a summer stay in Tunbridge Wells, taking the waters:

  We have had several showers and to-day it seems to be set in for rain; but I shall not wish it to continue much longer than to-day for this is a terrible place in continued wet weather. Here is a pritty deal of company, but not near so much as
last year, and but little quality.

  And again:

  By the help of fine weather, which we now have, and a good horse to carry me abroad in it, and some few old acquaintances I have met with here, added to my own family (not to speak of the pleasure I take in being an idle spectator and admirer of the Gay World) my time rubs on pritty well.

  And finally, that same increasingly hot August, after commiserating with Hulley for being ‘shut up and stew’d in a public office in London’:

  But we ought, and must indeed, affect the philosopher so far as to endeavour as much as we can to make the lott that falls to our share in the world as easy and light as may be, and leave the rest to time and fate.16

  Palmer was writing in 1765, the year after the Bank’s Charter was renewed for a further twenty-one years. It does not seem on the whole to have been a particularly contentious process, with the Treasury getting if anything the better of the bargain. The Bank agreed to advance £1 million on Exchequer bills at 3 per cent; it also agreed to make an outright gift to the Exchequer of £110,000, with no interest attached; and Charles Jenkinson, who as joint secretary to the Treasury had helped to draft the bill, would subsequently reveal how ‘an eminent merchant’ and Bank proprietor, Sir William Baker, had at the time ‘strongly opposed’ the ‘bargain’, though perhaps only in private, ‘on the ground of its being too hard a one for the Bank’. From the Bank’s point of view, a significant plus in the legislation was a tighter wording about fraudulent transfers of stock – a concern recently highlighted by the systematically fraudulent activities of a broker called John Rice, who had eventually fled to the Continent, where he was pursued by representatives of the Bank and of the South Sea Company, before being arrested at Cambrai in January 1763, put on trial at the Old Bailey and compelled to pay the ultimate penalty.17