UK has two world famous addresses – Buckingham Paalce and 10, Downing Street. There is another one for econ nerds called Threadneedle Street, the place where Bank of England is housed. Interestingly, BoE is called Old Lady of Threadneedle street as well.
There is some interesting history behind this title given to BoE. John Keyworth, curator of the Bank’s Museum (and the Old Lady’s oldest and longest-serving employee tells the story in this nice article in BoE’s latest bulletin.
BoE got this title thanks to a cartoonist named James Gillray published on 22 May 1797.
The cartoon shows the Prime Minister of the day, William Pitt the Younger, pretending to woo an old lady, the personification of the Bank, but what he is really after is the Bank’s reserves,
represented by the gold coin in her pocket, and the money-chest on which she is firmly seated.(1)
At the time, the Bank was a joint-stock company(2) operating under Royal Charter, and therefore essentially a private company — and so it was perceived as having been taken advantage of by the politicians. A series of events beginning with a landing in February 1797 by several hundred French troops at Fishguard on the Welsh coast and ending with an accusatory speech in the House of Commons by the opposition MP Richard Sheridan had prompted Gillray to produce the cartoon.(3)
The Fishguard incident was perceived by many as a precursor to the long-expected French invasion and sparked a panic. The Bank was inundated by holders of notes wanting to exchange them for gold and its reserves were reduced within a fortnight from £16 million to less than £2 million. This situation could not be sustained and an order was passed releasing the Bank from its obligation to pay its notes in gold. Known as the ‘Restriction of Cash Payments’ or simply ‘The Restriction Period’, it had the effect of reserving the gold in circulation and the Bank’s vaults for the war effort. The Restriction Period continued until 1821. Unsurprisingly, this action was seen by the Government’s detractors as outrageous and Sheridan, representing the Whig opposition, described the Bank as ‘an elderly lady in the City who had… unfortunately fallen into bad company’.(4)
Gillray, from his workplace in St James’s, latched onto Sheridan’s words. Dressed in a gown made of the new £1 and £2 notes issued to supplant the gold coin in circulation, an old lady sits
protectively on a chest representing the Bank’s reserves, declaiming against the unwanted
attentions of the skeletal, freckle-faced, pointy-nosed Pitt. The scene is set in the Rotunda, a
well-known public office in the Bank’s Threadneedle Street building. Clerks seated at their
desks can just be discerned in the background. A document headed ‘Loans’ refers to the
Pitt administration’s continual demands on the Bank for funds.(5)
It has other historic cartoon strips as well. They show BoE’s history as it has evolved in interesting manner…Wish we could study economics using such tools as well..