The Bank of England was, strangely enough, the project of a Scotchman, William Paterson. The plan was submitted to Government in 1691 but was not carried into existence for three years. It was purely a business concern, brought into effective existence through the needs of commerce, the opportunity afforded being the need of the State and the concern of the statesman. It had a capital at first of over £1,200,000, which was loaned to the nation on the security of the taxes when the Charter was signed, there being certain safeguards against the possibility of political misuse. The Controlling Board was to have twenty-five members who were to be elected annually by the stockholders with a substantial qualification. There were at this time in England private banks; but this was an effort to formulate the banking rights, duties, and powers of capital under the ægis of the State itself. But even so sound a venture, enormously popular from the very first and with the whole might of the nation behind it, had its own difficulties to encounter. Its instantaneous success was an incentive to other adventurers; and the co-operation with government which it made manifest created jealousy with private persons and commercial concerns. Within two years its very existence was threatened, first by the individual hostility of those in the bullion trade, who already acted as bankers, and then by a rival concern incorporated under strong political support. This was the National Land Bank whose purpose was to use the security of real estate as a guarantee for the paper money which it issued for convenient usage. Strong as the Bank of England was by its nature, its popularity, and its support, it was in actual danger until the rival which had never “caught on”--to use an apposite Americanism--actually and almost instantaneously collapsed.
The safety thus temporarily obtained was purchased at the cost to the Government of a further loan of two million sterling--with the value to the contra of an alliance thus begun with the Whig ministry.
A further danger came from the mad and maddening South Sea Scheme five years later; but from which it was happily saved solely through the greater cupidity and daring of the newer company.