Central banks have received mixed reviews from the commentariat and policy experts for their decisions and actions over the last 15 years. Supporters argue that the central banks saved the financial world from almost certain collapse (whatever that means) during both the 2007–2008 global financial crisis and the early uncertain days of the COVID pandemic. Critics respond that the central banks’ strategy of bailouts and loose monetary policy during the era likely caused more long-term problems than they solved, including contributing to the global inflation experienced since 2021.

As opposed to recent central bank policy, books explaining the history of central banks and their proper core functions are a rarity. One of the most influential of the banks is the Bank of England (BoE). It was not the world’s first central bank, but it was the template for the First Bank of the United States, which was established in 1791 and was a central bank predecessor to the Federal Reserve. I previously reviewed a book that reconsidered Walter Bagehot’s views on the BoE’s function as lender-of-last-resort during the 19th century (“Would Bagehot Be Smiling?” Winter 2019–2020). Anne L. Murphy, in her new book Virtuous Bankers, goes back to the 18th century and considers a broader range of the BoE’s functions. Murphy is a history professor and executive dean at the University of Portsmouth and the author of the 2009 book The Origins of English Financial Markets: Investment and Speculation Before the South Sea Bubble.

She spent many years meticulously researching the required details for Virtuous Bankers, and that will be obvious to the reader. Major chapters have 120–150 footnotes each, and the appendices provide supplementary materials for more detailed assessment and reading.

Day in the life / Virtuous Bankers draws much of its vast detail on the operations of the BoE in the 18th century from a two-year examination conducted between 1783 and 1784 by a Committee on Inspection consisting of three BoE board members. “Their final reports run to over 80,000 words and detail all aspects of the Bank’s operations and management,” notes Murphy, who includes the reports in six separate appendices to Virtuous Bankers.

In terminology that only a modern-day consultant could love, I would describe the inspection as an operational process review. According to Murphy, the three appointed members of the committee were “sympathetic to the cause to inspect the Bank,” and were “directors of relatively short standing,” although this included one member who had been on the Board for well over a decade.

By the early 1780s, the BoE had been in operation for nearly 90 years and its staffing had ballooned from 17 to 300 clerks. As an example of the detail Murphy unearthed from the BoE archives, she provides another appendix with the names and home departments of all staff, along with their annual salaries circa April 1783. These range from £20 (watchmen) to £250 (senior staff).

The subtitle’s reference to “A Day in the Life of” is not meant literally in the sense of a focus on a single day’s activities during the early 1780s. Rather, the phrase describes the form of Murphy’s narrative, which draws from the inspection reports to give the reader a sense of the types of events that might face a typical contemporary BoE staffer:

The business of the Bank of England started early. At six in the morning in the summer and seven in the winter, William Watkins [paid £40 per annum according to the book’s appendix], the principal gate porter, took a set of keys from where they hung near the kitchen in his apartment in the Bank, unlocked the main gates and set them open for the day. As he opened the gates, Watkins would find two groups of workers waiting to be let in: the out-tellers and the house porters.

The reader is later informed that Watkins has “a deputy given that Mr. Watkins could not be expected to be in constant attendance at the gate.” One also learns that at the end of the day the various keys to the offices of the bank were to be delivered to his lodge because “it was usual, but not compulsory, for people to check either with him or his wife before taking any keys from his house.”

Contemporary functions / The narrative does spend considerable time on the mundane, administrative tasks that Watkins is responsible for, but its major focus is on the BoE’s financial tasks. The core functions of the BoE at the time were mostly centered on fiscal responsibilities in supporting

its relationship with the state and by the 1770s its loans to the government exceeded £11 million. It also managed nearly 70 per cent of the long-term public debt … and this related to a significant amount of debt … [which stood] at the end of the war with America, at £245 million.

These borrowings were required “in emergent situations like war,” and Murphy refers to Britain’s status as a “fiscal-military state.”

The BoE’s state functions extended to

remittances overseas to support the state’s military operations. It also managed the circulation of Exchequer bills … what was essentially a monopoly over short-term lending to the government. It provided both deposit and borrowing facilities for government departments and offices … and it lent to the army, navy and ordnance…. [A]lthough the Bank was not the only financial institution to issue paper money, the fact that its notes were not only accepted widely but also accepted in payment for tax liabilities meant that its paper was supported directly by the actions of the state.

Another one of its functions was the

discounting business, especially from the 1760s onwards … [which] allowed the Bank to become integral to the management of the London economy … as the Bank’s directors intervened to manage the credit market through its discounting policy…. The [BoE] was at the apex of Britain’s financial architecture when the Inspectors started their work.

The reader is thus exposed to the evolution of the BoE, migrating from a focus on micro-level government services to macro-level “financial stability” that is more familiar in modern central banking. This is also evident in a discussion of the nascent stages of the BoE as “a lender of last resort: an institution that could, and was willing to, lend to another financial entity for which no other avenues of credit might be open … [during the] financial crisis of 1763 … and the more widely examined banking crisis of 1772.”

Location, sights, sounds, and smells / Murphy dedicates a significant amount of the early chapters to the physical buildings where these central bank functions were performed, in particular its location on Threadneedle Street where it is still located:

The church of St. Christopher le Stocks, which stood directly adjacent to the Bank, was being pulled down between 1781 and 1784, and new buildings were being erected on the site to accommodate the institution’s ever-expanding work…. The Threadneedle Street site of the new Bank placed it opposite the Royal Exchange and closer to the Exchange Alley, the location of much of the activity in London’s stock market…. The transfer to Threadneedle Street was a significant step in the Bank’s history.

Murphy credits the move with bolstering the bank’s reputation:

The building of a new Bank of England was representative of a significant change in the institution’s fortunes. Following the bursting of the South Sea Bubble in late 1720 and the consequent disgrace of the South Sea Company, the Bank’s relationship with the state became smooth and easy and the institution began to be seen as the safe hands into which the nation’s finances were entrusted.

Beyond the physical location of the BoE, Murphy gives the reader a strong sense of the building’s rooms and halls and the bustling activity that took place within it in a section entitled “The Customer Experience.” The former is conveyed by “three more or less contemporary images.” These include a “plan of the [BoE] hall,” the cavernous venue for the interactions of those who had business at the BoE; “a plan of the adjoining offices” to the hall; and an 1808 painting by Thomas Rowlandson entitled Great Hall of the Bank of England, which gives the reader a visual depiction of the workplace:

As can be seen in these images, in the hall the public would have seen desks for the cashiers and the in-tellers…. Also in the hall were desks for the convenience of customers needing to write out their names and addresses on notes and to weigh, count and examine ready money.

In a separate chapter entitled “Making the Market,” Murphy discusses the Bank Rotunda, the setting for the open outcry markets that took place at the BoE, supplemented by another Rowlandson painting: “[The] Rotunda continued to provide the most important daily opportunity for brokers, jobbers and public creditors to meet and arrange their transactions.” To give the reader an even better feel for the environment, Murphy continues:

[A] visit to the Bank was a sensory experience … a grand space and visually impressive. It would have been noisy at times. Visitors might have been aware of a variety of languages being spoken. Commercial environments were noted for the diversity of their participants…. There would have been many people in the hall and the other offices. The mix of individuals would have produced a mix of smells…The crowd and thus the need to wait to be served may have produced feelings of impatience.

What is a virtuous banker? / Murphy does not dedicate much of the book to the question that logically flows from its title. However, during the introductory and concluding chapters of Virtuous Bankers, she does discuss how the Inspectors understood this issue:

Whatever questions [the Inspectors] had about processes, they remained confident about the importance of the bank to the public. They also asserted the virtue of that work and the diligent and honourable behavior of a majority of the bank’s employees. [The Inspectors] remained convinced of the value and virtue of the Bank of England.

Separately, in an online post that Murphy penned to promote Virtuous Bankers, she focused on what has been the symbol since 1694 of the BoE’s association with the state:

The institution’s directors carefully curated an image of virtue…. The Bank’s symbol, Britannia, was repeated throughout the [BoE] building and stamped on its notes, letterheads and ledgers. With her shield and spear and close associations with trade, industry and profit, Britannia offered a clear statement of the conflation of the Bank’s aims with the goals of the British state.

Conclusion / I am not entirely convinced of the virtue of the work of the BoE, nor do I understand how virtue is defined in this context or why it even matters. The idea that the BoE board was willing to have a committee scrutinize the bank’s operations is impressive, although the appointed members clearly had a conflict of interest in overseeing the review. Outside parties would have been sufficiently distant from operations to conduct a more independent review, but it is not clear that this would have been typical during this era.

What is clear is that Virtuous Bankers is a very detailed, well documented, and readable snapshot history of the BoE during the latter half of the 18th century.