The debate then died down for some six or seven years, while the Bank continued to apply its practical good sense. The reason for the debate’s return was mainly economic (in particular another unfavourable turn on the exchanges, throwing fresh doubt on the strength of the currency in a paper-money regime), but it also owed something to the remarkable stockjobber-turned-economist David Ricardo. ‘All the evils in our currency’, he stated in a pungent piece in the Morning Chronicle in August 1809, were ‘owing to the over-issues of the Bank, to the dangerous power with which it was entrusted [since 1797] of diminishing at its will, the value of every moneyed man’s property, and by enhancing the price of provisions, and every necessary of life, injuring the public annuitant, and all those persons whose incomes were fixed, and who were consequently not enabled to shift any part of the burden from their own shoulders’. Ricardo undoubtedly came to hold a dim view of the Bank, delighting in nicknaming it dismissively ‘the company of merchants’ – which was true enough, though underestimating the very real concern about conflicts of interest if that institution elected out-and-out bankers to its Court of Directors. In any case, not long afterwards, the Commons agreed to appoint what became known as the Bullion Committee, with the three active members comprising its chairman Francis Horner, the rising Tory politician William Huskisson and the widely esteemed Henry Thornton.14
Taking evidence between February and May 1810, the Committee had several sessions with the governor, John Whitmore, and deputy governor, John Pearse. In all likelihood neither enjoyed the experience, but they held firm to their position that (in the governor’s words) ‘the Bank never force a note into circulation, and there will not remain a note in circulation more than the immediate wants of the public require’. And they explained that when it came to making a discounting decision, the three key considerations were ‘the amount already given to the individual’, ‘the solidity of the paper’ and ‘the appearance of its being issued for commercial purposes’. Indeed, insisted Whitmore, ‘the Bank does not comply with the whole demand upon them for discounts, and they are never induced, by a view to their own profit, to push their issues beyond what they deem consistent with the public interest’. More than once the two men found themselves having to stall – ‘I desire time to consider that question … I would wish for time to consider that question … I cannot say, for want of advices …’ – while Whitmore was adamant that ‘I decline answering questions as to opinion.’ Perhaps inevitably, that included anything relating to the possible future of cash payments, with both men playing the deadest of bats. Following the proceedings especially closely was Ricardo, and on Whitmore being asked a hypothetical question and replying that ‘never having weighed the subject with any reference to the price of Bullion, I am not prepared with an opinion how a merchant would act in such a case’, he privately noted, ‘Is not this a confession that he has not considered a most important question in political economy, particularly necessary to be well understood by a Bank director?’
The most powerful criticism of the Bank came from Sir Francis Baring, no longer able – following the recent tide of speculation amid an apparent loosening of monetary policy – to support suspension and the wide discretionary powers that that had given to the Bank:
There are many instances of clerks not worth £100 establishing themselves as merchants, and receiving (since the restriction) an accommodation from the Bank, by discounting what is called good bills to the amount (probably) of five or £10,000; such a demand I am inclined to consider as created by the Bank, and not arising out of a regular course of trade, such as would exist if the restriction was removed. This circumstance is important, if my opinion, that the circulation of the country cannot be perfectly safe until the restriction is removed, is well founded.
‘I think the Bank would not be disposed to extend their issues beyond three-fourths part of its present amount,’ Baring added, ‘if the restriction was removed.’ To these and similar charges, Jeremiah Harman, a director since 1794, was unwilling to concede an inch:
Do you not apprehend that there is a disposition in persons keeping accounts at the Bank, to apply for a larger extent of discount than it is on the whole expedient for the Bank to grant? – Very many do, and we treat them accordingly.
Do you not think that the sum total applied for, even though the accommodation afforded should be on the security of good bills to safe persons, might be such as to produce some excess in the quantity of the Bank issues if fully complied with? – I think if we discount only for solid persons, and such paper as is for real bona fide transactions, we cannot materially err.
The final Bank witness was John Humble, principal clerk of the Bullion Office (which according to him ‘used formerly to be called the Warehouse’). ‘Can you state to the Committee,’ he was asked, ‘the quantity, or nearly the quantity, of gold bullion imported, that has been deposited in your office in the course of the last year?’ ‘I have no conception of it,’ he replied. ‘Could you not state from your books the amount of sales of gold of all sorts for the last year?’ To this he was more helpful: ‘Probably we might.’
Horner, Huskisson and Thornton (by now an explicit bullionist) produced their report in June. The key recommendation was that cash payments should be resumed in 1812; and their treatment of the Bank was firm but measured, noting at the outset that suspension in 1797 had been ‘not a measure fought for by the Bank, but imposed upon it by the Legislature for what were held to be urgent reasons of State policy and public expediency’. The fundamental argument was straightforward:
It was a necessary consequence of the suspension of cash payments, to exempt the Bank from that drain of Gold, which, in former times, was sure to result from an unfavourable Exchange and a high price of Bullion. And the Directors, released from all fears of such a drain, and no longer feeling any inconvenience from such a state of things, have not been prompted to restore the Exchanges and the price of Gold to their proper level by a reduction of their advances and issues.
Unfortunately, suggested the report, the Bank had been too stuck in its ways, failing to alter its policy, based on familiar ‘sound and well adjusted principles’, in the light of the unfamiliar post-1797 situation. The three wise men helpfully summarised that policy:
The Bank Directors, as well as some of the merchants who have been examined, shewed a great anxiety to state to Your Committee a doctrine, of the truth of which they professed themselves to be most thoroughly convinced, that there can be no possible excess in the issue of Bank of England paper, so long as the advances in which it is issued are made upon the principles which at present guide the conduct of the Directors, that is, so long as the discount of mercantile Bills are confined to paper of undoubted solidity, arising out of real commercial transactions, and payable at short and fixed periods.
Furthermore, the report went on:
It was natural for the Bank Directors to believe, that nothing but benefit could accrue to the public at large, while they saw the growth of Bank profits go hand in hand with the accommodations granted to the Merchants. It was hardly to be expected of the directors of the Bank, that they should be fully aware of the consequences that might result from their pursuing, after the suspension of cash payments, the same system which they have found a safe one before. To watch the operation of so new a law, and to provide against the injury which might result from it to the public interests, was the province, not so much of the Bank as of the Legislature.
Ultimately, the discretionary trust, established as a result of suspension, was one ‘which it is unreasonable to expect that the Directors of the Bank of England should ever be able to discharge’, given that ‘the most detailed knowledge of the actual trade of the Country, combined with the profound science in all the principles of Money and circulation, would not enable any man or set of men to adjust, and keep always adjusted, the right proportion of circulating medium in a country to the wants of trade’. The magisterial summing-up came later in the paragraph:<
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The Directors of the Bank of England, in the judgement of Your Committee, have exercised the new and extraordinary discretion reposed in them since 1797, with an integrity and a regard to the public interest, according to their conceptions of it, and indeed a degree of forbearance in turning it less to the profit of the Bank than it would easily have admitted of, that meant the continuance of that confidence which the public has so long and so justly felt in the integrity with which its affairs are directed, as well as in the unshaken stability and ample funds of that great establishment. That their recent policy involves great practical errors, which it is of the utmost public importance to correct, Your Committee are fully convinced; but those errors are less to be imputed to the Bank Directors, than to be stated as the effect of a new system, of which, however it originated, or was rendered necessary as a temporary expedient, it might have been well if Parliament had sooner taken into view all the consequences.
The Bank may still have been in some sense a private body (to the extent, indeed, that the Bullion Committee meekly gave way over the Bank’s insistence that it need not be required to reveal the total of its private discounts); but inasmuch as it was to be regarded as a public institution – increasing by the year – the whole question of discretion was shaping up as the battleground of the future.15
More immediately, the question was whether Parliament would side with the economists or with the practical men. ‘A strong political contention has arisen about our paper currency,’ observed Samuel Thornton at the start of 1811, adding that ‘parties are very nearly balanced’. Finally, in May, a four-day debate in the Commons decided the matter. From the Bank, Alexander Baring (a director since 1805) asserted that ‘the mass of the evil was to be found in the national debt, and not in the circulating medium’, while Samuel Thornton ‘disclaimed the idea that the Bank issued paper to an unlimited amount’, pointed out that ‘the discounting of bills was not the only means of issuing their paper, much being issued on government securities’, and ‘expressed his conviction that there would be no limit to the distress and embarrassment that must follow the restoration of cash payments, under circumstances like the present’; from the bullionists, William Wilberforce expressed disappointment with the evidence of the Bank directors (‘their eyes were not opened to the magnitude of the duties they were called on to discharge’); and from the politicians, the decisive contribution was that of Spencer Perceval, like Pitt both prime minister and chancellor of the exchequer, according to whom the adoption of the Bullion Report ‘would be tantamount to a declaration that they would no longer continue those foreign exertions which they had hitherto considered indispensable to the security of the country’. In other words, there was a war still on, its outcome remained deeply uncertain, and the unavoidable fact was that resuming cash payments – however theoretically desirable – would seriously jeopardise getting hold of specie in order to pay armies and fleets, to subsidise allies and to pay for food imports in the context of Napoleon’s Continental Blockade. Indeed, if Horner’s resolution in May 1811 to end the Bank restriction ‘two years from the present time’ had been passed, that would have taken effect in 1813, just when (observes Clapham) ‘Napoleon was beating Russians and Prussians at Lützen and Bautzen’. But Horner’s resolution was rejected, the Commons instead resolved that cash payments should be resumed six months after the end of the war, and for the time being the Bank was allowed to continue doing its best or worst. Ricardo meanwhile could only fume. ‘I trust the day is not far distant,’ he had written in the Morning Chronicle following the publication of the Bullion Committee’s report, ‘when we shall look back with astonishment at the delusion to which we have so long been subject, in allowing a company of merchants, notoriously ignorant of the most obvious principles of political oeconomy, to regulate at their will, the value of the property of a great portion of the community.’16
Fortunately the great economist was not privy to the Bank’s records in October 1811, revealing difficulty in maintaining a quorum at the Court and seven directors (including Alexander Baring, Stephen Thornton and a future governor, Cornelius Buller) being rather acerbically asked ‘when their attendance could be depended upon’. Even so, the government’s reliance upon the Bank during these last few years of the war was as heavy as ever, as again and again it sent supplicant letters begging the purchase of surplus Exchequer bills. Perceval’s successor as chancellor was Nicholas Vansittart – known as ‘Van’ and somewhat unfairly the laughing-stock of the advanced school of financiers under Huskisson, who called him ‘old Mouldy’. A request from Van on 16 May 1815, just weeks before Waterloo and asking the governor and deputy governor to enable the purchase of £2 million of Exchequer bills, had all the well-worn phrases: ‘Lord Liverpool [prime minister] and I had hoped … I am, however, sorry to find myself under the necessity of requesting … I feel it my Duty earnestly to recommend this Application to the favourable consideration of your Court.’ As usual, the application was successful; and Clapham’s evocative phrases about the Bank’s ‘reluctant yet stubborn’ support of the chancellor of the day, backing him ‘faithfully, if sometimes with groans’, almost certainly capture the relationship exactly.17
The war was far from being John Soane’s restriction period, as his physical transformation of the Bank continued apace. Two crucial decisions were taken and implemented in the mid-1790s: to acquire land to the north, pushing up to the edge of Lothbury; and to turn the whole of the Bank into a continuous walled island site, exuding security, solidity and permanence – invaluable qualities at a time of considerable radical agitation. Thereafter, it was full steam ahead. In 1797 he began the Residence Court, home to key officials and their families; in 1798–9, having quite recently rebuilt the 4 Per Cent Office, he built the Consols Transfer Office, along rather more orthodox classical lines than the Bank Stock Office; and over the next few years there followed the New Library, the New Accountant’s and Cashier’s Offices, and the Lothbury Court, with the last showing Soane at his most simultaneously picturesque and monumental, albeit largely concealed from the visitor’s gaze. Soane’s classical masterpiece, though, was Tivoli Corner. This was built on the north-west corner between 1805 and 1807, was wholly in public view and possessed a uniqueness authoritatively described by Daniel Abramson:
A marvel of geometry mediating a difficult site, its pyramidal elevation and complexly alternating projections and recessions reached back through two centuries of European Baroque architecture. A century of the classical British picturesque, beginning with Vanbrugh, also climaxed with the Tivoli Corner’s ebullient skyline and richly shadowed layers of space. The Tivoli order’s full-bodied Roman Corinthian richness – here with complete garland and bucrania frieze – juxtaposed against the angular plainness of the Grecian inflected attic seemed to propose a modern classical amalgam.
Soane also took the opportunity during the 1800s to expand and remodel the suite of directors’ parlours, including the addition of the Governor’s Court, and to construct the 130-foot Long Passage, linking the Bank’s public spaces near the southern front to its more private areas to the north. Altogether, it was a prodigious achievement by one man; and it was neither idle boasting nor special pleading when Soane affirmed in 1803 that ‘the business of the Bank is my first consideration’.
For their part, the directors deserve credit for the backing they gave him, especially given that – initially at least – Soane’s approach was far from universally applauded. In May 1796, at a meeting of the Architects’ Club with Soane absent, satirical verses were read aloud (subsequently printed, eventually leading to a libel case) that, among other charges, accused Soane of having vandalised Taylor’s Rotunda; while later in 1796 three dining acquaintances of the diarist Joseph Farington castigated his work at the Bank as ‘affected and contemptible’. Undoubtedly some directors harboured reservations, on the grounds partly of expense (sometimes running at upwards of £40,000 a year) and partly of taste, with the Committee for Buildi
ng perhaps somewhat nervously in 1797 conveying its wish to Soane for ‘some ornament but not too much’. Two things helped Soane. The first was his increasingly close links over the years with many of the individual directors, who employed him as their personal architect; the other was a growing general sense of the sheer scale and impressiveness of what he was doing. A culminating moment came in June 1814, when Tsar Alexander I took time during his visit to London to inspect the Bank, with the architect by his side, at the end of which the Tsar, reported the press, ‘complimented Soane in a very particular manner on the grandeur of the work and shook him most cordially by the hand’. Few contemporaries denied the grandeur; as Leigh’s New Picture of London put it four years later, ‘this immense pile of building is more extensive in its range of offices, and more eminent for its architectural ornament, and interior arrangement, than any single public office in the metropolis’.18
Soane was probably unstoppable, war or no war, but without the conflict there certainly would not have been a Bank Volunteer Corps. It was formed in 1798, was given the responsibility of defending the Bank as a reinforcement of the Picquet, and had its moment in the sun on the first Monday of September 1799, as recorded by Farington:
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