In 1722 the rest (or reserve fund) was established by the bank, as a measure to cover extraordinary losses in the future, and to inspire more confidence among the public as to the ability of the bank to meet reverses.  This fund, in July, 1862, had accumulated to L3,132,500 sterling, or about twenty-one and a half per cent. of the capital.

The first forged note of the Bank of England was presented in the year 1758, or sixty-four years after the bank was established.  In 1780 these forgeries became more numerous, and were so well executed as to deceive the officers of the bank.

Let us now recur to some of the incidents connected with the bank in early ages.  Of these, the author, Mr. Francis, furnishes numerous instances.

Among other frauds upon the bank was that of clipping the guineas, by one of the clerks employed in the bullion office.  This occurred in 1767.

The forgery of its notes having been made a capital offence, the waste of life in consequence was severe.  During the eight years, 1795 to 1803, there were one hundred and forty executions for this crime; and two hundred and nine between 1795 and 1809; and from 1797 to 1811 the executions were 469.  ’The visible connection between the issue of small notes and the effusion of blood, is one of the most frightful parts of this case.’

In 1803 a fraud on the bank to the extent of L320,000 was perpetrated by Mr. Robert Astlett, a cashier of the bank.  This was in the re-issue of exchequer bills that had been previously redeemed, but which were not cancelled.  This fraud amounted to about 2-1/2 per cent. of the capital, and although it did not prevent a dividend, it prevented the distribution of a bonus which would otherwise have been paid to the shareholders.

In the year 1822 another fraud on the bank came to light.  This was perpetrated by a bookkeeper, and amounted to L10,000.  In 1824 the fraud of Mr. Fauntleroy on the bank was discovered, amounting to L360,000.  This was done by forged powers of attorney for the transfer of Government consols.

The bank was brought near suspension again in 1825 by the imprudent expansion of its notes.  After the resumption of specie payments in 1820-’21, the true policy of the bank would have been to maintain an even tenor of its way; instead of which it increased its circulation twenty-five per cent. in the year 1825 (or from L18,292,000 to L25,709,000), while the issues of the country banks were equally enlarged, giving encouragement to violent speculation among the people.  The specie reserve of the Bank of England fell from L14,200,000 in January 1824 to L1,024,000 in December, 1825.  This difficulty of the bank was relieved by the issue of a few thousand bills of L1 and L2.

Speculation had been rife in 1824; no less than 624 companies were started with a nominal capital of L372,000,000, including mining, gas, insurance, railroad, steam, building, trading, provision, and other companies.  At the same time foreign loans were contracted in England to the extent of L32,000,000, of which over three fourths were advanced in cash.