Known as the " Old Lady of Thread-needle Street." Its corporate name is " The Governor and Company of the Bank of England." Situated in an irregular square opposite the Royal Exchange and residence of the Lord Mayor in London; bounded on every side by the open street, it covers about four acres, all light being secured from interior courts. The largest financial institution in the world. Since the great riot of 1780 a guard of soldiers has been marched into the bank every night for protection. The employees number over 925. The land covered by this building is probably one of the most valuable pieces on the surface of the earth.
The original charter was granted in 1694, and its existence is due to one William Paterson,2 a Scotchman. The present
¹ Gilbart said in 1834 that " a bank which receives lodgments of money, is called a bank of deposit."
² Those interested in the granting of this charter used as an argument that " it would rescue the nation out of the hands of extortioners and usurers, lower interest, raise the value of land, revive and establish public charter was granted in 1844. The currency of England today is largely in the hands of this bank. The " Bank of England " probably has greater influence upon the financial concerns of the world than any other institution. Its statements are published weekly, and give the minimum rate of discount at which the Bank will handle first-class paper. The influence of the Directors' Meeting, which takes place on every Thursday, is felt throughout the world.
The rate of discount established by the " Bank of England " fixes the rate of interest allowed by all the London joint-stock banks on deposits, such interest being generally at the rate of about one and one-half per cent. less than the " Bank of England " rate of discount. This rate of discount also establishes the interest rates which London banks allow on cash balances of foreign correspondents, as well as the rate of interest charged on over-drafts; besides the discount rate in the open market throughout Great Britain. Likewise, it fixes the rate of discount on documentary bills, as to the rebating of interest on account of anticipating repayment. Its influence is felt on the value of all international bills of exchange. It often works as a protection to the gold reserve held by the bank itself, for it often increases the value of money in London, checking exports of gold as well as encouraging imports of the same.1
By it are issued the " Bank of England Notes." It allows no interest on deposits. It is a bank in which all London banks keep their reserves. It receives and disburses the government funds and manages the government debt.
Although the above is but a brief sketch of the " Bank of England " and the field which it covers, yet it is sufficient to make one comprehend the magnitude of this institution's position in the financial world.
¹ This fact was well illustrated by the action of the Bank on Oct. 19, 1906, in raising the discount rate to 6%, it already having previously been raised to 5%. This was on Friday. It was natural to expect any change in the rate to have been made at the regular bank meeting on Thursday. There had been a tremendous drain of gold to America, a large demand from Egypt, and an anticipated demand from Argentina, besides which it was reported that the Bank of Germany was accumulating gold for Russian account. The reserve in the Bank of England had been reduced by gold withdrawals to about £18,000,000, and it was to check further encroachments upon this that the sensational advance referred to was made. This was the highest rate since Friday, Nov. 1, 1890, just before the " Baring Panic," when the rate was advanced to 6%.