By Ioana Lungescu

Established in 1694, the Bank of England was founded by royal charter in order to preside over the national debt market. In the trend of the day, it was begun as a joint-stock bank, where private citizens endowed it with capital. Besides issuing bonds, the bank was created with the ability to provide funds for the waging of war against the Low Countries (the Netherlands). In 1694, England was in a time between the end of the Third Anglo-Dutch War and the start of the Fourth Anglo-Dutch War.

Soon after the Bank of England was founded, a deregulatory act was passed by Parliament in 1694, allowing former associates of the EIC to establish their own trading firms. Drawing connections, it is highly likely that those associates wealthy enough to endow their own trading practices would also have been wealthy and opportune enough to fund the Bank of England by buying debt.

The year 1697 was pivotal for both the Bank of England and English trading companies. First, the Bank of England’s rights and debt repayment system were expanded. A new EIC was also formed that year because of the deregulatory act to compete with the old EIC. This new EIC was only limited to 100 members, making it more exclusive than the original company. However, the Royal Exchange (stock market) did not care for the differentiation between firms as they essentially completed the same purpose and brought the same commodities into the country, eventually leading to a merger between the old company and the new.