Connection

There is also a connection between the Bank of England and the Battle of the Boyne. As a Protestant King, William III was the scourge of Catholic pretenders to the English throne, not least in Ireland. But fighting battles like the one on the Boyne cost more money than the King could afford. The City of London's goldsmiths, fearing that a future Catholic King would steal their money, were willing to lend the King pounds 1.2m to fight on, thus opening the account now known as the National Debt. The Bank's original Directors were in it for the money, of course. The Bank of England charged the King a perpetual rate of interest of 8 per cent, and won the right to issue bank notes. It was a good deal.

During the Gordon Riots in 1780, the mob attempted to capture the Bank, which was by then in its premises on Threadneedle Street. The great neo-classical architect Sir John Soane was commissioned to design a 30-foot-high stone wall to enclose the Bank; it stands there still. After the riot, the army was ordered to provide a protective picket each night. Soldiers marched through the City for 193 years, until 1973, when electronic surveillance took over. (One young Guards officer, asked to apologise for having smuggled his doxy into the Bank to help him pass the time, said: 'Apologise to a lot of tradesmen? I'll send in my papers first]')

The Bank was only a little more than 100 years old when the Irish playwright Richard Brinsley Sheridan referred crossly to 'an elderly lady in the City'. James Gillray, the cartoonist, immediately transformed this into 'The Old Lady of Threadneedle Street' - a title that will be 200 years old in 1997. Gillray mistrusted the Bank because it was the agent for the paper currency that replaced the gold coinage during the Napoleonic War.

The fuel for part of the heating system at the bank-note printing plant at Debden, Essex is old bank notes, which are burned in furnaces there. Watch-towers on the building make it look like a prison camp, and the Bank prided itself on security at Debden, until it discovered that at least one woman employee was stuffing used notes in her knickers. The Bank's estimate of its losses is pounds 680,000.

There is a direct connection between the Bank of England and Swanage Town Hall. The first meeting of the Court of Directors of the Bank of England took place on 27 July 1694 in a rented room in the Mercers' Hall on Cheapside. When the old facade of the Mercers' Hall was replaced in 1879, it was recycled and became part of Swanage's new council offices.

Although the idea of a national bank came from a Scotsman named William Paterson, the first Governor of the Bank of England was the son of a Huguenot refugee. With a staff of 19, Sir John Houblon moved down the road from the Mercers' to the Grocers' Hall in Poultry, and, so it is said, dressed the Bank's servants in his livery of pink tailcoats, red waistcoats and top hats. This is still worn by its doormen and messengers.

Having survived a Catholic plot to burn it down in 1715, and the South Sea Bubble five years later, the Bank had established a virtual monopoly of government business. This was so profitable that one of its directors, named Humphrey Morice, embezzled the sum of pounds 29,000 in 1731 (call it pounds 2.9m for a rough present-day equivalent). In the 19th century, one of Houblon's successors died in office scandalously in debt to the Bank, having granted himself an overdraft. Otherwise, ostentatious rectitude has been the order of the day.

Unverified reports speak of a break-in at the Bank of England, when an unidentified man offered to meet the directors in the bullion room deep below ground level, and astonished them by appearing through an old, unmapped drain underneath the deep vault. Supposedly, this honest intruder was given pounds 800 for the information. No record of the payment appears in the Bank's accounts, but since the episode is said to have taken place in 1836, it rather supports the notion that nothing is 'as safe as the Bank of England'.

The Bank Charter Act of 1844 set up the Bank of England's monopoly to print bank notes in England and Wales. (In Scotland, banks still print their own notes). No new 'bank of issue' could be established and the old ones gradually died out, leaving the Bank the sole authority entitled to print notes. The last private English bank note was issued in 1920 by the Somerset bank Fox, Fowler and Co.

The first Black Friday on the Stock Exchange occurred in 1866 with the collapse of the Overend Gurney bank. After that - especially with the Baring Crisis of 1890 - City banks came to rely on the Bank of England to bail them out of a crisis. It became 'the lender of last resort'.

St Christopher is the patron saint of the Bank of England. Presumably because St Christopher, in carrying the child Jesus across the river, is said to have carried the weight of the whole world on his shoulders - and this is how some Governors have felt in their relations with the Treasury.

A less fanciful explanation is that the Bank is built on the site of St Christopher Le Stocks.

During the First World War, the Bank's staff grew fast and burst out of its delightful web of old courtyards, and the Governor, Montagu Norman, decided that behind Soane's wall it should be rebuilt. Sir Edwin Lutyens was keen to get the commission, having already built the Midland Bank's headquarters in Poultry, but offended Norman by drawing unflattering caricatures of him during their interview, and the job went to Sir Herbert Baker instead. (Norman did not like the portrait done of him by Augustus John, either).

In the 1920s, the Gold Standard put the same squeeze on the economy as the ERM did under Norman Lamont. Montagu Norman, who loved the Gold Standard, earned the undying hatred of the Labour Party by his adherence to it, and one of the new government's first acts after the 1945 election was to nationalise the Bank of England. Despite being in public ownership, a notice at the Bank's entrance warns all-comers: 'No admission, except on business.'

Until new technology allowed for quick and accurate colour reproduction, the only seriously undetected bank-note forgeries were the work of the printing works of the Third Reich on Delbrueckstrasse in Berlin from 1940 until 1945. The Germans proposed debauching sterling by flooding the world with forged fivers. Apart from small mistakes that were obvious only to experts, the forgeries were of high quality. The best estimate of the value of the notes printed is pounds 134m, or pounds 1.75bn today. A great cache of notes was found at the bottom of Lake Toplitz in 1959, but for years after the war, German forgeries were still being seized.

Despite nationalisation, the Bank continued to operate in an old-fashioned way for years after the war. It supervised the City by a nod and a wink (approval), or by means of the Governor's raised eyebrows (disapproval). This method was not competent to deal with the flamboyant speculators of the Seventies and Eighties. The Bank still supervises banks, but its powers are now backed by law.

Employees can open current accounts with the Bank, but overdrafts were not on offer until recently. Chancellors of the Exchequer and Lord Mayors of London can also open accounts; one advantage of having one is that some people like to keep chegues drawn on the Bank of England as souvenirs, rather than cashing them.

One of the world's best collection of 18th-and 19th-century autographs is kept in the mock-Georgian records office at the Bank's sports ground at Roehampton. Among signatories on applications for government bonds is George Washington. The lawns at the sports ground are so fine that the qualifying rounds for Wimbledon are are played there.

The Bank has printed some pounds 1m notes, but they are for technical and internal use. The Bank is shy of showing them to outsiders.

The first Governor to be appointed from the Bank's staff was Leslie O'Brien, who was also the last Chief Cashier to sign the crinkly white fiver. The only other Governor ever to be appointed from the staff is the present incumbent, Eddie George (right). Governors are plain Mister; they do not accept honours when in office because they think the job is grand enough already.

The Bank of England is the Government's bank manager, but, unlike most banks, it pays a large bonus each year to its biggest customer. The reason is that the high-street banks have to put down a deposit for the banknotes they get from the Bank to distribute to their customers. (They cannot argue; there is no other supplier). The Bank buys securities with the deposit money and, in 1993, the interest on those securities amounted to pounds 1,179m. After deducting printing costs and miscellaneous expenses, the Bank paid a bonus to the Treasury of pounds 1,117m. The monopoly on money is one of the most profitable businesses in Britain.

(Photographs omitted)