In May 1694 the Bank was given its charter.
Its capital was to be %pound;1,200,000, and it was to lend a sum equal to this to the Government at the moderate rate of 8 per cent.
In return it was given a monopoly of joint-stock banking - that is to say, it was to receive deposits, conduct discount and other business, and to issue interest-bearing notes as a company, while its rivals were forbidden 'to combine their individual resources for the same purpose.
This promised a rich return to speculators who would not have looked at the offer of a mere 8 per cent., and the Bank's shares were completely subscribed in ten days.
It called up 60 per cent.
of the capital, and then proceeded to lend the Government the whole %pound;1,200,000, the remainder being paid in notes under the Bank's common seal.
Such was public confidence in the Bank that these notes were accepted by army contractors who refused payment in tallies, and they rapidly passed into general circulation at par.
Encouraged by this success, the Bank issued more notes, and' used them to buy up the Exchequer tallies, which had fallen to a heavy discount.
An inflationary boom began in the City, and numerous fraudulent companies were floated.
Commodity prices rose by about 25 per cent.
; the price of silver rose from 5s.
5d., that of gold from %pound;4 to %pound;5 95.
Guineas rose from 22s.
in November 1694 to 25s.
in February 1695, and leapt to 30s.
Over %pound;750,000 worth of gold was coined that year, as against %pound;65,000 worth the year before.
In 1689 William III went to war with France and began contracting debts on a scale far larger than ever before.
In 1672 outstanding debts at the Exchequer were about %pound;2,280,000 and the annual revenue %pound;1,600,000; by 1694 William was spending 221 million annually on the army alone, and had the state of credit been as bad as it had been in Charles' reign the new regime must have collapsed.
As it was, the Government exhausted all the ordinary means of raising revenue - increasing taxation, borrowing from private persons in the City, issuing tallies to the extent of over %pound;5 millions - and Were... see: The Bank of England