WHILE was rebuilding London, the king was doing all he could to ruin the Londoners. Experience had taught the Stuarts nothing. . could not see, any more than his unfortunate father, that the prosperity of the kingdom, nay even of the king himself, was bound up in the prosperity of the city. The consequences of his disastrous policy fell slightly on himself but they ruined his successor. There can be no doubt that the dethronement of the dynasty became a certainty when London had decided against it. The causes of that decision have been detailed by many historians, and notably by one for whose readers no new arrangement of facts would have much interest.[1]  It will be only necessary here, therefore, to state those circumstances which relate strictly to the city, and especially those which resulted in the establishment of a modern " guild merchant" of such power that it regulates the trade, not of London only, nor even of England, but of Europe and the world.

The wealth of London, even after the great fire, was enormous, but the principle part of it was in the hands of the goldsmiths. What the mercers had been in the sixteenth century, the goldsmiths were in the seventeenth. They did not call themselves bankers, but professed to keep "running cashes," or, in modern

The great banker of the day was this Edward Backwell. Pepys mentions him many times. Among the diarist's most self-complacent entries are those which tell of the money he laid out in table silver, and in cups for presents. But Pepys also visited Backwell for political

There was keen competition among these early bankers, and other "goldsmiths" besides Backwell had dealings with the government. One of the most eminent of his rivals was connected with him by family ties. Tyringham Backwell, his son, married the daughter of Sir Francis Child, who had succeeded Wheeler at the Marygold just within the newly-built archway of Temple Bar. Part of

The family had become connected with the Marygold by a double marriage. Sir Joshua Child, an early governor of the East India Company, whose daughter carried an immense fortune into the Somerset family, now represented by his descendant the duke of Beaufort, had a younger brother, [5] apprenticed to William Wheeler. He was mentioned above as keeping 's running cash account, and had first set up as a goldsmith in Cheap, removing to Temple Bar early in the reign of I. The apprentice, according to the time honoured city custom, married his master's daughter, and the apprentice's mother, Mrs. Child, married the master's surviving partner, Robert Blanchard. The business was thus kept in the family, and in Francis Child was sole owner and took John Rayer into the firm as his junior.

This was not until after a crisis had occurred in the history not only of this, but also of every other London banker of the day. Nearly all were ruined, but Child's and another eminent firm escaped by the same means. In the government of . was so far from representing a majority of the nation that it comprised within the celebrated "Cabal" almost all the eminent men in the kingdom who thought with the king. The Cabal did not dare to call Parliament together. They had obtained a subsidy from the late House of Commons with a view to helping the Dutch against Louis XIV. They had employed it to fit out a fleet and attack the Dutch. In order to carry on this unpopular enterprise further supplies were necessary. But how to obtain more money, without the aid of a Parliament, was a problem no one could solve, until Clifford happened to consult a man much more clever than himself, the celebrated Shaftesbury. He obtained from him by plying him, it was said, with wine till he forgot his prudence, a scheme so effectual, but so iniquitous, that we need not wonder if in a more sober moment he would have kept it to himself. had openly avowed that he would give the white staff of the treasury to any one who could show him where to find a million and a half. Clifford entering the royal presence claimed the staff, and unfolded the Shaftesbury plan. It consisted simply in closing the exchequer and seizing the goldsmiths' deposits.

Of course such an abominable piece of dishonesty must be kept secret. Yet, somehow, it got abroad to a limited extent at least. Among the goldsmiths who had money in the royal exchequer at the time was one who is still represented among city bankers. Messrs. Martin in Lombard Street, are the mercantile descendants

Thus did the son of "the man Charles Stuart" walk in the footsteps of his father, and, forgetting London's loyalty to him in his early years, the embassy to Holland,

London was now at the king's mercy, and he used his power as former kings, his ancestors, had used theirs. We are irresistibly reminded by what ensued of Rokesley and ., or, before their time, of FitzThomas and . The mayor and aldermen were summoned to show cause [7]  why their charter was not forfeited because they had printed and published a petition in favour of

The death of only precipitated the quarrel between London and the crown. Yet the oppressed citizens, when the king was in danger, knowing that a worse ruler was in store for them, crowded the churches to pray for his recovery, and a feeling sprang up very like the old sentiment of personal loyalty. But it was only in fulfilment of the mocking opinion which had himself expressed to his brother when he said, "They will never kill me, James, to make you king."

Nor were the citizens wrong in their apprehensions. James hardly needed the stimulus of Monmouth's rebellion to make him remember the petitioners of . Had the whig party among the citizens then obtained their wishes he could never have reigned. The sheriff when had refused the civic petition was alderman Cornish, and three of the companions of Jeffreys in the west, their hands still dyed with the blood of the Somerset assizes, came into the city to inflict the king's vengeance. [9]  Cornish was on the Exchange transacting business when he received the fatal summons. His despair, for he must have seen at once that there was nothing to hope for in a consciousness of innocence, in the justice of a packed jury, or in the clemency of James, betrayed no fear, but he behaved, as a witness of his death declared, with the natural indignation of a man murdered under legal forms.

He was arrested on Tuesday, 13th October, , hurried to and kept in solitary confinement, without pens, ink or paper, without any power of communicating with his friends, without counsel, nay, even

.It may be asked how the government could count on obtaining a verdict from a jury of freemen in a case like this. But it must be remembered that the " city was in the hands of the king," as the ancient chronicles would have said, and that though there was a mayor, and though he had two sheriffs, yet the mayor was a nominee of the king-not, strictly speaking, a mayor at all, but a warden -and the sheriffs staunch members of the court party.[12]  Cornish was found guilty, condemned, and four days later, on Friday the 23rd, he was led to his own door, at the corner of Queen Street in Cheapside,[13]  and put to

There is one house, and one only left in Cheapside which may have seen the death of Henry Cornish. It stands at the corner of Friday Street, and retains its old cross mullioned windows. On its front is a stone carving, the chained swan of ., which may survive from an older house on the same site before the fire. Of King Street and Queen Street as they were then we can form little notion. The scaffoldings were still about many houses. St. Mary-le-Bow was not long finished. The head of the murdered alderman was placed over the newly repaired Guildhall, one of the few decorations of the kind it ever received, and typical of the abject state to which the city was reduced.

But a reaction was at hand. The trial of the bishops showed the temper of the great mass of the citizens, It was judged dangerous to conduct the prisoners through the streets, and they went to the Tower by water, but the people lined the banks of the , and " expressed all the transports that love, compassion, and rage could beget."[15]  Their acquittal was received with the loudest acclamations of joy. This was in June, , and before October James saw that the policy his

The immediate consequences of the king's flight were momentous to London. Men looked about everywhere in vain for some one whose authority was undoubted. The king's virtual abdication dissolved the whole fabric of society, law, and order. No regency had been appointed. The prince had not arrived.[17]  All eyes were turned towards the venerable body which still retained its ancient powers. The lord mayor reigned in London

William was determined not to precipitate matters, and called upon the lord mayor to disavow the petition. But it was virtually adopted by the assembled convention, and the accession of the new sovereigns was received in London with frantic signs of joy.[20] 

One of the first cares of the new government was to make a formal restitution of the privileges which under the tyrannies of . and his brother had been for

The citizens watched 's Irish campaign with exceeding interest. The siege of Derry and its relief were of personal importance to many of them: for Londonderry, to give it the full title, was a colony specially sent out by London. The city still has an Ulster estate, and the grant of . to the mayor,

The loan of 200,000£. with which London greeted the new king recalls a similar loan under similar circumstances to ., and betrays, as did the earlier grant, a feeling of confidence in the new dynasty, such as at the present day would be manifested by the state of the funds. But in the public funds had not yet come into existence, and the next step in commercial progress was, so to speak, to formulate or regulate the national debt, by instituting a corporation capable of dealing with it. The establishment of banks, as we have seen, had gone on rapidly during the reigns of the two last Stuarts. The closing of the exchequer, as the event proved, had rather tended to discredit the king

It was briefly this. A sum amounting to nearly a million and a half was to be borrowed by the government at eight per cent., and the subscribers to the loan were to be incorporated under the title of the Governor and Company of the Bank of England. When a clause had been inserted in the bill to the effect that the new bank was not to advance money to the government without the authority of parliament, it passed, to the great surprise, no doubt, of its framers and supporters, so loud and powerful had the opposition appeared. But at the moment money was in great demand, and no alternative scheme seemed likely to work so well. The opposition was even fiercer in the House of Lords than it had been in the Commons, but at the end of April the royal assent was obtained, and though, as Macaulay remarks, it was then as difficult to raise a million at eight per cent. as it would now be to raise forty times as much at half that rate,[26]  the confidence in the administration, as well as in the scheme itself, was so

The success of Paterson's scheme does not seem to have enriched him. But he was not a man to whom any amount of money could bring wealth. The working of the plan devolved on Michael Godfrey, a man of a very different type. Although not of middle age, he was already wealthy and known in the city. He was strongly opposed to the Stuarts, and from the mere circumstance that he was a nephew of Sir Edmund Berry Godfrey,[27]  who was supposed to have been murdered fifteen years before by the "Popish Plotters," he attracted public attention and confidence. He obtained leave for the early meetings of the new company to be held at Mercers' Hall in Cheapside, but in October of the same year, , he, in conjunction with ten other members of the company, signed an agreement by which Grocers' Hall in the Poultry was taken for eleven years, and here, the term having been renewed, the new society carried on business until .[28]  The first governor of the Bank of England was Sir John Houblon, to whose good offices, no doubt, the arrangement was due. "Here, in one room, with almost primitive simplicity, were gathered all who performed the duties of the establishment."[29]  The secretaries and their clerks numbered only fifty-four.

It may be worth while to pause a moment to compare the condition of the Bank of England at the present day with the modest establishment here described. It now

Godfrey, who rather than Paterson must be considered the founder of the bank, and who possessed the pen of a clear and ready writer, defended the infant undertaking with success in a pamphlet [30]  published in the following year, in which he set forth its great advantages, and justified his own reputation for foresight and prudence. As deputy governor he seems to have been practically manager of the whole concern, which, as he exultingly asserted, gave such a reputation to the government engagements-known as exchequer tallies-that they were currently taken by private persons at ten to fifteen per cent. less than before the establishment of the bank, "that it was the only fund ever settled in England that had lowered the interest of money"; and that notwithstanding the cost of the great war then raging, amounting on the part of England alone to thirty millions at least, the interest on the national debt had fallen.

When Michael Godfrey alluded to the war he little

The rivalry between the old goldsmiths' houses and the new institution was, of course, very keen, and might possibly have proved eventually fatal to the Bank of England. In fact, the enterprise was not three years old when it actually stopped payment.[33]  The recoinage of silver prevented the company from meeting their notes in cash: they had received worn and clipped coin at its nominal value, and had to pay in full. By various expedients, however, they managed to protract the periods of payment, to gather in debts, and to call upon shareholders, till things righted themselves. The bank deserved well of the country at large, and various concessions were made by government, so that public confidence was immediately renewed. It was common to speak contemptuously, but shares went up, and bank stock rose from a discount of fifty per cent. to a premium of one hundred and twenty. In vain the private banks dashed themselves against the new corporation. They only rendered its position firmer. It lowered the interest of money, as poor Michael Godfrey had prophesied, and thus at once earned the gratitude of the public and the hatred of the bankers. Runs were constantly organised, and every device practised that could discredit it. It was said that both the Childs and the

The further history of the Bank of England is that of England itself. By slow degrees it has risen to such a position that its proud title does not fully describe it. The whole world comes to its coffers, and its name has passed into a common proverb as the emblem of stability. The old building has been enlarged over and over again. The modest house of Sir John Houblon in Threadneedle Street, where its first building was erected, would not now accommodate a tenth part of the business. In one of its courts stands a statue, dedicated in , to the memory of " the best of princes, ., the founder of this bank."

It would be easy to occupy all the remainder of my space with particulars of the old goldsmiths and their successors. The revolution in politics did not more thoroughly alter the character of the government than the establishment of banking altered the tendency and tone of London business. Before a century had elapsed

The story of the South Sea Bubble has been often told. It is only the first and greatest of a long list of similar examples. Wild speculation, followed by deep depression, has ebbed and flowed in the city almost as regularly as the tide in the . The year was memorable for the Mississippi Bubble in , as well as for the South Sea delusion at home. The success of the Bank of England excited the imagination of schemers. Knaves were only too ready to take up any design that would impose for a time on fools. But the South Sea scheme differed from the countless bubbles of the day in attracting many who must be allowed to have had at least common sense., indeed, stood aloof. When the South Sea Company offered, in exchange for trading concessions, to relieve public burdens to the extent of nearly a million a year, he warned the country against indulging in a dream.[35]  But every one else went mad. The king himself and his ministers partook of the general excitement. Threadneedle Street, where the South Sea House was situated, sometimes became impassable with crowds from the other end of town, all thronging to invest. Stock at one time rose to 1100£. per cent. premium. It may be asked in what trade the company proposed to engage.

[1] Macaulay, ' History of England, from the accession of James II.'

[2] F. G. Hilton Price's ' Handbook of London Bankers,' p. 60, and the reprint of the' London Directory' of 1677. Mr. Price's paper on " Edward Backwell," read before the London and Middlesex Archaeological Society, throws much light on the commercial history of London in this reign.

[3] The book in which the Protector's account was entered has been lost; but many of Messrs. Wheeler's ledgers are in possession of the present firm of Child and Co., on the same site.

[4] Riley, 'Memorials,' p. 377.

[5] This is not quite certain. See Price.

[6] The proceedings are minutely detailed by Maitland and Allen.

[7] The writ of summons was popularly known from this sentence as the Quo warranto.

[8] This was 1683, so that FitzThomas's imprisonment took place 418 years previously.

[9] Macaulay, chap. v.

[10] Macaulay, chap. v.

[11] Maitland, i. 484.

[12] The mayor's name was Smith. Gosling and Vandeput were the sheriffs, but it does not appear which of them packed the jury.

[13] Maitland says "at the end of King Street, facing his own house." This expression denotes as his a house at the opposite corner, namely, in Queen Street, formerly " Soper's Lane." Macaulay remarks that the spot is equally in sight of the Exchange and the Guildhall. It is so now, but probably in 1685 only the Guildhall could be seen from the corner of King Street.

[14] Macaulay

[15] Maitland, i. 485.

[16] Macaulay, chap. ix. The earl of Salisbury.

[17] Macaulay, chap. x.

[18] It will be remembered that in those days the " demise of the crown," not only dissolved parliament, but put an end to the commissions of the judges. The mayoralty, almost alone among English institutions of the kind, was unaffected by James's virtual abdication. Even the churches staggered under the blow, and Sancroft himself felt its weight within a few months. (See vol. ii., 'Lambeth.')

[19] Maitland, i. 488.

[20] It is, of course, easy to make too much of the election of William by the city, but perhaps Lord Macaulay makes too little of it, and has not done justice to its constitutional significance. He mentions the Guildhall very casually, and places the action of the civic authorities in a subordinate place. (See above, chap. iii. and Freeman's 'Norman Conquest,' v. 411.) But several kings had ascended the English throne after a less formal election by the city of London.

[21] 'Municipal London,' by Joseph Firth, p. 19. I shall have occasion further on to notice once again this portly volume. Here it will be sufficient to observe that the facts collected by Mr. Firth are treated with such an amount of bitter party feeling that their value is greatly lost, and their real significance obscured.

[22] One London firm, Clavel and Simpson, St. Paul's Churchyard, published in 1689 ' Walker's Account,' as well as 'A new and exact map of London-derry and Culmore Fort, drawn with great Exactness by Captain Macullach, who was there during the siege.'

[23] Francis, 'History of the Bank of England,' i. 35.

[24] The account of Paterson in Francis does not show his connection with the Bank of England in a clear light. It seems to assume more knowledge of the subject than most readers possess.

[25] Macaulay, chap. xx.

[26] Macaulay, chap. xx.

[27] Macaulay, by a mistake, calls him " the brother of Sir Edmondsbury Godfrey," vol. ii. p. 483, ed. 1873.

[28] See Heath's 'Grocers' Company,' p. 31. This hall, becoming ruinous, was rebuilt in 1802.

[29] Francis, i. 65.

[30] Reprinted in the second volume of Francis's 'History of the Bank.'

[31] Macaulay, chap. xxi.

[32] He was the son of another Michael, the brother of Sir Edmund Berry Godfrey, whence Macaulay's mistake. (See ' Arch. Cantiana,' vi. 261.) His mother was Mary the daughter of Thomas Chambrelan of Leadenhall Street. As he was born in February, 1658, he was still a young man. The verses on his monument have disappeared, and are not worth reprinting from Maitland ii., 1184, though they contain a charming non sequitur.

[33] The account of this event in Francis, i. 75, is so wanting in clearness that a reader must conclude he desired to gloss over the whole story-and he perfectly succeeded.

[34] Mr. Heywood Hardy's picture of this scene is well known. It was just a century ago, for the marriage took place in 1782.

[35] Green, iv. 136.

[36] A well-known picture by E. M. Ward, R.A., truthfully represents the scene in Change Alley as it appeared in 1720.

[37] Francis, 'History of the Bank,' i. 135.

[38] Francis, i, 163.