With the rope, the prison, the hulk and the transport ship, this Bank has destroyed, perhaps, fifty thousand persons, including the widows and orphans of its victims. At the shop of this crew of fraudulent insolvents, there sits a council to determine, which of their victims shall live, and which shall swing! Having usurped the royal prerogative of coining and issuing money, it is but another stop to usurp that of pardoning or of causing to be hanged!
For its part, understandably unwilling not to protect the integrity of its notes, the Bank could only hope to ride out the storm, no doubt aware that justice for the little men was sometimes rough. ‘We talked of Bank note Forgeries,’ recorded Joseph Farington in January 1819 after sitting at dinner next to the son of a City alderman. ‘Price said, that it is well known that the principal Forgers reside at Birmingham; that they are well known to the Bank Directors but sufficient evidence against them has not been obtained.’3
On the larger question of resumption itself, the next few months would see a remarkable sequence of events unfold. At the Bank’s urging – based on the argument that it was ‘a matter of the highest Importance that the Public shall not be deluded with an Expectation which is not likely to be realized’ – the government appointed secret committees of inquiry in both the Commons and the Lords, which duly held hearings between mid-February and the start of May. The Bank’s more experienced witnesses (including Jeremiah Harman and Samuel Thornton, as well as governor George Dorrien and deputy governor Charles Pole) continued to refuse to commit themselves. ‘It is very difficult to say when the Bank could with propriety resume its cash payments, it must always be judged of by experience,’ Dorrien told the Commons committee (chaired by Robert Peel). ‘Fixing a period, and not adhering to it, always creates a great deal of dissatisfaction and disappointment in the public mind,’ added Harman; and he stressed that such was the state of the foreign exchanges ‘what further time may be necessary must depend on circumstances not under our control’, though of course ‘we always look on the bright side of things’. By contrast, two younger, more recently elected directors, William Haldimand and William Ward (in his leisure time a high-scoring batsman), revealed themselves as appreciably more open to the prospect of early resumption, with Ward arguing that a return to gold would result in a change of commercial ‘habits’, and in particular in fewer ‘extravagant speculations’ than during the restriction period. The committees recommended a definite return to gold within four years, but in the end it would come down to government resolve and parliamentary opinion.
‘A strong and decisive effort can alone redeem our character and credit,’ insisted Liverpool to doubters; his fellow-Tories Peel and Huskisson were especially determined to seize the moment; on 20 May the Bank made a formal representation to the Commons, declaring – in the face of ‘all the obloquy, which has been so undeservedly heaped upon the establishment’ – that restriction had given it ‘duties to the community at large, whose interest in a pecuniary and commercial relation, have in a great degree been confided to their discretion’; and four days later there began a two-day debate in the Commons to settle the matter. Amid what the historian Boyd Hilton has described as a ‘curiously unreal’ atmosphere, Peel not only warned that if ‘the circulating medium was to be left to the discretion of the Bank directors, uncontrolled by any consideration but that of their own profits, it would become impossible to estimate the extent of the mischief that might ensue’, but also asserted unambiguously that the time had come for Parliament to ‘recover’ from the Bank ‘the authority which it had so long abdicated’; Manning counter-warned that ‘if the House withdrew its confidence from the Bank at a moment like the present, they [the Bank] could not be answerable for the consequences’; Ricardo had some knockabout fun, accusing the Bank of being ‘a cautious and timid body’ possessing ‘total ignorance of the principles of political economy’; and in a dramatic denouement, amid ‘loud and universal cries of hear, hear!’, George Canning for the Tories successfully called on the House to make ‘an undivided vote’ for resumption within four years, in order ‘to show the public that the House was in earnest in its attempts to restore the ancient standard’ – though not without Manning ‘reserving to himself … the right of stating his objections to the proposed measures on a future occasion’.4
The politicians had triumphed, defying the wishes of not just the Bank but the City as a whole. After all, Nathan Rothschild, the square mile’s new titan, could hardly have been more direct in his evidence to the Commons secret committee, anticipating ‘a great deal of mischief’ in the event of early resumption, given that ‘money will be so very scarce, every article in this country will fall to such an enormous extent, that many persons will be ruined’; while shortly before the crucial Commons debate some 400 to 500 of the City’s merchants, bankers and traders had signed a petition along similar lines. ‘They all dreaded the pressure of monetary stringency,’ in Hilton’s words, and ‘very few could see the ultimate commercial benefits of deflation and a “sound” currency’. How much were they (and indeed the Bank’s leadership) motivated by broader pragmatic economic concerns? Or by fear for their own commercial survival? Or simply by a natural conservatism, having become comfortably used to the paper-money dispensation? Perhaps all one can usefully say is that no doubt it was a mixture of all three. As for the politicians, there were also arguably three principal motives at work. First, as developed by the bullionist theoreticians (who had done much of the intellectual heavy lifting for resumption in their 1810 report), a belief in the superior commercial morality of gold as opposed to paper, not least its anti-speculative aspect; second, the understandable conviction that by placing gold at the centre of the monetary system, automatically regulating and stabilising its daily workings, this would greatly reduce the Bank’s unwelcome scope for discretion; and third, as probably only perceived by a select few, a view of the return to gold as transformative for London’s place in the bigger global picture. On that last motive, Huskisson had set out his thinking in his visionary memo to Liverpool the previous July:
I have no doubt that with the extent of our commercial dealings and operations of Exchange, which make this Country the Emporium not only of Europe but of America North & South, the Bank of England would make London the chief Bullion Market of the World … The facility it would give to Trade in affording them the means of promptly rectifying the Exchange with any particular Country, and probably in the particular Coin of that very Country to which it might be desirable to remit Bullion, could not fail to form one of those inducements which would make London the settling House of the Money transactions of the World.
In time, of course, this would become a vision fully and proudly shared by the Bank and the City, almost believing that they had had the idea in the first place; but in 1819 that time was not yet.
The next year or two proved difficult for almost all concerned, as the boom of 1818 gave way to an intense economic trough accompanied by considerable popular disaffection – including 1820’s Cato Street conspiracy, a plan both to assassinate the Tory Cabinet and to seize the Bank. For its part, the Bank during the months after the resumption vote remained grumpy enough, refusing Liverpool’s request for advances on a loan and generally showing a frosty attitude to government, until eventually Vansittart felt compelled to begin peace talks with three key directors (Harman, Thornton and Haldimand). Postponement of resumption was not on the table – Liverpool was adamant that to do so would amount in practice to a ‘perpetual restriction’ – but Van did promise to repay £5 million; and by November 1819 Huskisson was able to inform his wife that ‘all the difficulties with the Bank are adjusted’. During 1820 the Bank made large purchases of bullion, helped by favourable exchanges; and by February 1821 its treasure had reached £11.9 million, more than ever before, prompting it to decide that if the return to gold was going to have to happen anyway by 1823, this was the moment to do it. Accordingly, payments in cash were resumed in May – almost a quarter of a centu
ry after the fateful turn of events in 1797 – and, simultaneously, small notes (£1 and £2) were withdrawn. The role may not have been quite of its own choosing, but the moment was now at hand for the Bank to prove itself ‘the great Steam Engine of the State’.5
It was very shortly before resumption that the twenty-seven-year-old George Warde Norman, not yet a partner in the family firm of timber merchants, was elected a director. As he gazed around the Court Room during his early weeks and months, and listened to proceedings, he was largely unimpressed. Not only were governor Charles Pole and deputy governor John Bowden ‘utterly without the scientific knowledge which a Director of the present day would be expected to possess’, he recalled in the late 1850s, but most of the other senior directors, sitting also on the Committee of Treasury, were ‘persons of still humbler grade of intellect’. He then named names: ‘Jeremiah Harman, who had long ruled the Bank with almost despotic sway, was ignorant, pompous, prejudiced, and overbearing. The opinion of a junior, if opposed to his, he hardly thought of answering, excepting by an exhibition of scorn and contempt. Manning and Mellish, amiable but feeble, Dorrien feeble but less apparently amiable, in fact a nobody. Pearse a man of some sense, but little knowledge.’ What about Samuel Thornton, who had become a director back in 1780 and would remain on the Court until eventually stepping down in 1836? ‘He was a man of strong mind and general ability,’ reflected Norman. ‘His ability was conspicuous in all he said. Unfortunately he was by nature sly and a thorough intriguer. He liked secret paths and crooked ways and it was with the utmost difficulty one ever arrived at a knowledge of his real wishes and opinions.’
In what was clearly a mixed-ability class, there were nevertheless some notable figures. The cricketing William Ward, quite apart from saving the present-day Lord’s ground from speculative development in the mid-1820s, was an incisive presence on the Court until a reversal in his fortunes compelled retirement in 1836; Norman himself was a serious economist, whose youthful pamphlet on the question of timber duties prompted Thornton to sponsor his election; and William Cotton (elected 1822) was a conscientious social reformer and a man of parts, as displayed not least by his invention in the 1840s of an ‘automaton balance’, capable of weighing and separating light gold coins from those of standard weight, in the process doing much to preserve the eyesight of the Bank’s weighing clerks. Perhaps the most notable director, though, was John Horsley Palmer. Born in 1779 into a London merchanting background, he became a director in 1811, having established himself as an East India merchant, and emerged in the course of the 1820s as the Bank’s dominant voice. ‘Love of business and ability to bear any quantity of it, and above all a force of will, which I never saw exceeded in any man,’ were identified by Norman as his key characteristics. ‘When he had made up his mind it was all but impossible to turn him and his resolute advocacy of his opinions bore down all opposition.’ Fortunately, also noted Norman, ‘he had much sound sense’.
Like quite a number in the larger mercantile community, Palmer’s merchanting background included an active interest in the slave trade. How common was that in the case of Bank directors? A helpful snapshot comes from looking at the twenty-one directors who attended Court on 31 July 1834 – the day before the previous year’s Slavery Abolition Act came into force, ending slavery in the British Empire – and identifying how many of them subsequently received compensation. As far as one can tell, the answer is five: relatively small amounts (under £7,000) for Palmer himself and Timothy Curtis (governor in the late 1830s); some £50,000 each for Sir John Rae Reid (governor after Curtis) and Humphrey St John Mildmay (Barings’ representative on the Court); and some £100,000 for Rowland Mitchell (a Lime Street merchant who had joined the Court in 1832 and would leave it in 1841 after his business failed). It requires much fuller research, though, to reach any definitive conclusions.6
The slavery question aside, Anthony Howe’s illuminating prosopographical study enables one to make various generalisations about the composition of the Court during the second quarter of the century – a Court that still met in Taylor’s Court Room, though with the addition since 1805 of a wind-dial (connected with a vane on the roof) giving the direction of the wind, vital information to merchants in the age of sailing ships. As ever, well over four-fifths were indeed still merchants, with bankers as such still firmly excluded on the grounds of possible conflicts of interest; the particular bias of many of those merchants was towards the Russia and West India trades; a not wholly insignificant minority of directors had close links with British industry, especially the metal and mining sectors; recruitment still tended to come from influential City families (prompting Howe’s comment that ‘by and large this was no world for Dick Whittingtons’); new directors were often in their early to mid-thirties, seldom having received a university education; and – perhaps just starting to be recognised in what was becoming an age of reform in the wider world – the strict rotation of the governorship, with length of service since election the sole criterion, was little incentive for an able, restlessly ambitious merchant to put himself forward for the Court. As for the social position of these directors, Howe convincingly emphasises that ‘it would be wrong to exaggerate the aristocratic lifestyle within the Court, which contained many men whose social horizons were firmly contained within the metropolis, with the pattern of sociability of an urban haute bourgeoisie, with London houses and occasional retreats to country and coast’. A letter that Samuel Thornton sent to John Soane in August 1825 speaks volumes. ‘Being here with some friends from the North who are desirous to see the improvements that are making in Windsor Castle I shall be greatly obliged if you can give me an introduction to Mr Wyatville [the architect carrying out the work] if Etiquette does not prevent you,’ the Bank’s aged director wrote somewhat nervously from Chobham Place in Bagshot. ‘I shall of course abstain from going,’ he went on, ‘when there is the least probability of any of the Royal Family visiting the premises & be anxious to accord to any rules.’
Soane himself was by now on his final stretch. Between 1818 and 1823 he renovated Taylor’s 4 and 5 Per Cent Offices, unifying (in the warm words of the nineteenth-century critic Richard Brown) ‘the classical delicacies of the Greek and Roman designs with the playfulness of the Gothic’; and between 1824 and 1828 he reconstructed the whole of the 370-foot south front, after a successful appeal to the directors that if they followed his advice and chose the more expensive option (rebuilding as opposed to merely repairing) the gratifying outcome would be that ‘the whole of the exterior of this extensive pile erected at so many different times and under so many different circumstances will appear uniform, simple, and characteristic’. The rebuilding included in 1825 the front entrance, prompting soon afterwards a plea to Soane from ‘A Proprietor of Bank Stock’:
The new Front you have given to the Bank, is an honor to the Country and the age; but I would beg leave, with the kindest feelings, to point your attention to the wretched state of the pavement in front of it – one half is paved with very middling flags; the other – with blocks of granite of very irregular surface. Do pray have it amended, to correspond with the glorious architecture.
Eventually, almost eighty and with eyesight failing, Soane felt no alternative but to call time – two years after his belated knighthood – on an astonishing, transformative tenure. ‘During a period of forty five years, my best endeavours have been anxiously and unremittingly exerted in the faithful discharge of the important trusts reposed in me,’ he wrote to the directors in October 1833, resigning from ‘a situation which has so long been the pride and boast of my life’. And though over the years they had sometimes quibbled about costs, the directors were surely being sincere when in reply they thanked him for his ‘unremitted zeal’ on the Bank’s behalf – zeal that had done much to create for that institution an image of certainty and monumentality, discouraging to critics and inquirers alike.7
‘In consequence of the return to cash payments at the Bank, and the great dimi
nution of work, many clerks, mostly old and unfit, were pensioned,’ recalled Samuel Harrison about the step-change of the early 1820s. ‘Nearly 200 went. Some applied to go, among these Geldald, who on his salary of £200 got as much as £100 a year with 16 years’ service. He commuted this for £1,000 down.’ Higher up the food chain, these years saw not only two successful government debt conversions (£150 million of 5 per cent stock converted to 4 per cent; £70 million of 4 per cent stock reduced to 3½ per cent), but also the altogether more problematic ‘deadweight’ scheme. A forty-five-year annuity to cover the cost of military and naval pensions, it proved a no-go with the investing class, before the Bank reluctantly assumed from government a share of responsibility. More generally, this early post-resumption phase was a time of ‘high bullion reserves and low profits’ (in Clapham’s phrase), with two interesting developments: a flurry of substantial mortgages, especially to the landed class (£300,000 to the Duke of Rutland, £200,000 to the Marquis of Bath, £130,000 to the Duke of Devonshire); and the start of a serious business relationship with Nathan Rothschild, the master of bullion operations. A huge boon, meanwhile, from the end of the paper-money era was the collapse in forgeries and prosecutions, following the withdrawal of small notes, and it was a further relief when in 1824 a new form of banknote could be issued, whose ‘numerical sum’ would, reported the London Gazette, be ‘visible in the substance of the paper in Roman letters on waved lines’, thereby significantly enhancing security. Not that fraud suddenly disappeared from the scene. Henry Fauntleroy, a partner in the West End private bank Marsh, Stracey & Co, was arrested that autumn on the grounds of large-scale fraudulent transfers of government stock, going back to 1815; it emerged at the trial that the principal motive was revenge (‘they shall smart for it’), after the Bank had begun to refuse his bank’s acceptances; the gallows followed; and it cost the Bank some £265,000 to replace the fraudulently transferred stocks.8
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