Paying for privilege: the political economy of Bank of England charters, 1694-1844

The Bank of England was established by Parliament in 1694 as an explicitly temporary institution, which could be dissolved upon one year’s notice after the 11-year life guaranteed by its initial charter had passed. Renewed nine times between 1694 and 1844, we argue that the element of renegotiation inherent in the Bank’s existence reflected uncertainty, by both Parliament and the Bank, and we test this hypothesis by analyzing the timing of the renewals of the Bank’s charter. We find renegotiation of the charter was initiated by Parliament when the Crown’s budgetary circumstances, shaped by unforeseen military expenditures, required additional funds and when the monopoly value of the Bank’s charter rose.