ABSTRACT
The Bank of England, today the most famous financial institution in the world, had a curious origin. At the end of the seventeenth century, when, as had often been the case before, England was engaged in a war with France, and when James II had but recently fled across the seas, the throne of William and Mary rested upon the support of the Whigs. The prosecution of war with France, the backer of the Stuart pretenders to the throne, called for money, and where was money to be had? It was in these circumstances that a company of Whig merchants of the City of London conceived the idea of forming a limited liability company to lend money to the government. At that time, of course, trading with limited liability was a rare thing, and the royal charter of 1694, which was issued by William III, establishing the “Governor and Company of the Bank of England,” conferred an exceedingly valuable privilege.
