"Four general courts to be held in every year, in the months of September, December, April, and July. A general court may be summoned at any time, upon the requisition of nine proprietors duly qualified as electors.
"The majority of electors in general courts have the power to make and constitute by-laws and ordinances for the government of the corporation, provided that such bylaws and ordinances be not repugnant to the laws of the kingdom, and be conformed and approved, according to the statutes in such case made and provided."
The above charter, which was originally granted for ten years only, was subject to various renewals. A chronological account of these, together with an account of the various additions to the capital, and of other incidents in the history of the Bank, will be found in the following pages.
1697. Bank notes were from fifteen to twenty per cent. discount. During the re-coinage in 1696, the bank had 'issued its notes in exchange for the clipped and deficient coin previously in circulation, and it was not able to procure from the mint a sufficient quantity of the new coins to discharge the notes presented to it for payment. This compelled the bank to make two calls of twenty per cent. each upon its stockholders. It paid some of its notes by bills, bearing interest at six per cent. The bank also advertised, that while the silver was re-coining, "such as think it fit, for their convenience, to keep an account in a book with the bank, may transfer any sum under five pounds from his own to another man's account."
Exchequer tallies and orders for payment having, in 1696, been at a discount of forty, fifty, and sixty per cent., and bank notes at a discount of twenty per cent., the bank was empowered to receive subscriptions for the enlargement of its stock; four-fifths in tallies and orders, and the remaining one-fifth in bank notes. The sum subscribed was £1,001,171 10s., which, with the original capital of £1,200,000, raised the capital to the sum of £2,201,171 10s.
The bank charter was extended or renewed until the expiration of twelve months' notice, to be given after the first day of August, 1710, and until payment by the public to the bank of the demands therein specified; being an extension or renewal for five years (8 and 9 William III. c. 20). It was also enacted, "that the common capital and principal stock, and also the real fund of the governor and company, or any profit or produce to be made thereof, should be exempted from any rates, taxes, assessments, or impositions whatever, during the continuance of the bank;" and that the forgery of the company's seal, or of any of its notes or bills, should be felony without benefit of clergy.
1707. The subscription of £1,001,171 10s., raised in the year 1697, was restored. This reduced the bank capital to the original sum of .£1,200,000.
1708. The bank charter was extended or renewed until the expiration of twelve months' notice, to be given after the first day of August, 1732, and until payment by the public to the bank of the demands therein specified; being an extension or renewal of the said charter for twenty years (7 Anne, c. 7). By this Act it is provided, "That during the continuance of the said corporation of the Governor and Company of the Bank of England, it shall not be lawful for any body politic or corporate whatsoever, created or to be created (other than the said Governor and Company of the Bank of England), or for any other persons whatsoever, united or to be united in covenants of partnership, exceeding the number of six persons, in that part of Great Britain called England, to borrow, owe, of take up any sum or sums of money on their bills or notes, payable at demand, or at a less time than six months from the borrowing thereof."
1709. In this year there was a new subscription of £1,001,171 10s., another of £2,201,171 10s., and a call upon the proprietors of fifteen per cent., £656,204 1s. 9d.; altogether making the total capital of the bank, £5,058,547 1s. 9d. This increase of capital became necessary, from the bank having in the preceding year lent the government £400,000 without interest, and agreed to cancel one million and a half exchequer bills in its possession, amounting, with interest, to £1,775,027 17s. 10 1/2d.
1710. A further call of £501,448 12s. 11d., which increased the bank capital to £5,559,995 14s. 8d.
1713. The bank charter was extended or renewed until the expiration of twelve months' notice, to be given after the first day of August, 1742, and until payment by the public to the bank of the demands therein specified; being an extension or renewal of the said charter for ten years (12 Anne, Stat. I. c. ii.). In consideration of receiving this privilege, the bank undertook to circulate £1,200,000 in exchequer bills. In this year the legal rate of interest was reduced from six to five per cent.
1717. The bank cancelled £2,000,000 exchequer bills, and received interest from the government at five per cent. on the amount.
1718. Subscriptions for government loans were first received at the bank. From this period the government have found it more convenient to employ the bank as their agents in all operations of this nature, than to transact them at the treasury or the exchequer. The bank, becoming by degrees more closely connected with the government, began to make advances of money in anticipation of the land and malt taxes, and upon exchequer bills and other securities.
1720. The South Sea Bubble commenced April 7.
"The directors opened their books for a subscription of one million, at the rate of £300 for every £100 capital. Persons of all ranks crowded to the house in such a manner, that the first subscriptions exceeded two millions of original stock. In a few days this stock advanced to £340, and the subscriptions were sold for double the price of the first payment. The infatuation prevailed till the 8th day of September, when the stock began to fall. Then did some of the adventurers awake from their delirium. The number of the sellers daily increased. On the 29th day of the month, the stock had sunk to one hundred and fifty. Several eminent goldsmiths and bankers, who had lent great sums upon it, were obliged to stop payment and abscond. The ebb of this portentous tide was so violent, that it bore down everything in its way, and an infinite number of families were overwhelmed with ruin; public credit sustained a terrible shock; the nation was thrown into a dangerous ferment; and nothing was heard but the ravings of grief and despair. Some principal members of the ministry were deeply concerned in these fraudulent transactions. When they saw the price of stock sinking daily, they employed all their influence with the bank to support the credit of the South Sea Company. That corporation agreed, though with reluctance, to subscribe into the stock of the South Sea Company, valued at £400 per cent., £3,500,000, which the company was to repay to the bank on Lady-day and Michaelmas of the ensuing year. This transaction was managed by Mr. Robert Walpole, who with his own hand wrote the minute of agreement, afterwards known by the name of the Bank Contract. Books were opened at the bank to take in a subscription for the support of public credit, and considerable sums of money were brought in. By this expedient the stock was raised at first, and those who contrived it seized the opportunity to realize. But the bankruptcy of goldsmiths and the sword-blade company, from the fall of South Sea stock, occasioned such a run upon the bank, that the money was paid away faster than it could be received from the subscription. Then the South Sea stock sunk again, and the directors of the bank, finding themselves in danger of being involved in the company's ruin, renounced the agreement; which, indeed, they were under no obligation to perform, for it was drawn up in such a manner as to be no more than the rough draft of a subsequent agreement, without due form, penalty, or clause of obligation." 1