James Madison Papers

Notes on the Bank of England, [ca. 1 February] 1791

Notes on the Bank of England

[ca. 1 February 1791]

Bank of Engd. estabd. 1694. for abt. 11 years—to 1705. on the models of Genoa, Naples & Bologna. And. 3. 1411

The 1,200,000 £ subscribed in 10 days—& ¼ pd. down p. 1442

In 1697. Bank Notes depreciated 15 to 20 PerCt. The Bank obliged to pay 10 PerCt once a fortnight—& at length 3 PerCt. ev[er]y 3 months. p. 176,7.

In 1697. the capital of the Bank increased to 6,360,450—& the term extended to 1710—the Bank advancing to Govt. the amt. of the increase or in other words the tallies &c. being subscribed—& as these were pd. off in a few years—the Bank was reduced to its original capital. p. 178,9.—Note those tallies red. at par tho’ bought at 50 or 63 perCt. discount—greatest fortunes made ever known. p. 1804 felony to counterfeit the seal or notes of Bank.

The Bank prolonged, on its circulating 1½ Milln. Exch: bills at 4½ PerCt: till redemption of sd. bills5
In 1709.
The Stock £2,201,171. doubled—& that sum subscribed at the rate of 115 £. for 100 Stock—between the hours of 9 a m. & 1 p. m. of same day—& 1 Mil. more wd. have been subscribed if room for it—for this & prolongation of Charter to 1732—the Bank advanced £400,000 witht. interest—& to cancel exchequer bills 1,775,027 £ p. 244
Capital now £6,577,370.
The Bank supplied the Govt. 1,200,000 by circulating exchequer bills to the amt.—The Bank to continue a Corporation till 1742—& repayt. of yearly fund & origl. capital of 1,600,000 £. p 278.
The fund of Bank enlarged for circulating to Exchequer Bills & the B. to continue till redempn. of origl. fund. p. 285
Bank purchased of S. Sea—4,000,000, which made the B. capital due from public, 9,379,027 £ p 373
The Interest of part of the Bank Capital reduced from 5 to 4 PerCt. p. 384.
Bank aided Govt. to amt. of 1,750,000 £. by accepting annuities at 4 Perct. 500,000 pd. to B. by Govt. being part of 2[,]000,000 added to ⟨that capital?⟩ by 3. Geo. I.—whereby total of capital stock reduced to £4,875,027.7
Bank advanced by purchase of annuities 1,250,000, at 4 PerCt. p. 400
1,000,000 £ of Bank Capital pd. off, which reduced it to 3,875,027 £ p. 487.
Bank advanced 1,600,000 £ witht. interest, i.e. the 6 perCt of the old capital to that amt. reduced to 3 & 3 pd. on the advance. The consideration was, continuance of the monopoly charter from 1743 to 1764. Counterfeiters & Serts. of Compy. breaking trust made felons witht. clery. p 506.8
Total Bank Capital £10,700,000 due from Govt. & entitled to dividend—Besides which, 2,400,000 of annuities transferrable at Bank witht. any share of the profit—Dividend now & for some years 5½—interest from Govt. 4 PerCt.9
986,000 added to capital Stock due from Govt. making total—11,686,80010
Scarcity of money by German Wars. Bank issues notes as low as 15 & 10 £. Bs. of Edinbg. 20/ —11
Bank purchased renewal of Charter for 21 years from 1785 by lendg. 2[,]000,000 at 3 perCt—& this opposed as unfavorable to Govt.12
Dividend of 6 PerCt.13

Banks of Edinborough on same model with that of Engd. And. 3. 14114

Ms (DLC). In JM’s hand. Undated, but filed at the end of 1782 in Series 1 (see Index to the James Madison Papers under “England—History of Banking System”). For the dating of the Ms, see the preceding Notes on Banks, ca. 1 Feb. 1791 and n. 1.

1Anderson, Origin of Commerce, III, 141.

2Here and in other places below where JM gives only the page number, the reference is to the third volume (1790 ed.) of Anderson, Origin of Commerce.

3JM should have written “60.”

4In the passage cited, Anderson was quoting from Charles Davenant’s Discourses on the Public Revenues and Trade of England (1698).

5Anderson, Origin of Commerce, III, 234.

6This should be 1725.

7Ibid., III, 393.

8Anderson quoted from a 1742 act of Parliament prescribing death without benefit of clergy to counterfeiters and to “the company’s servants breaking their trust [with] the company.”

9Ibid., III, 519–20. The total for the annuities should be £5,200,000 rather than £2,400,000.

10Ibid., III, 530.

11Ibid., III, 603.

12Ibid., V, 489.

13Ibid., V, 519–20.

14Written on the verso of the first page of the Ms.

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