Die Bank von England im Dienste der Finanzverwaltung des Staates

Philippovich’s study traces the Bank of England’s conversion from a private corporation and public creditor into a central organ of fiscal administration. He deliberately sets aside the better-known problems of note issue and commercial banking in order to follow

nur die Entwicklung der Stellung der Bank als Cassen- und Schuldenverwaltungsamt des Staates herausgegriffen habe.

English translation: I have selected only the development of the Bank's position as the cash and debt-management office of the state.

The argument begins from the state as an economic subject: not only a regulator, but an administrative household needing secure receipts, economical payments, controlled balances, and reliable credit. England matters because this relation was not theoretically designed; it emerged from fiscal crisis, banking practice, and parliamentary government.

The early chapters reconstruct the setting of the Bank’s foundation: commercial expansion, colonial policy, the growth of deposit banking among goldsmiths, and the chronic disorder of Stuart finance. The stop of payment in 1672 exposed the weakness of royal credit, while the post-1688 settlement made funded public borrowing politically possible. Yet Philippovich stresses that the Act of 1694 did not create a state bank in any planned modern sense. It created a corporation of subscribers who lent to the government and received banking privileges; the later administrative consequences were unforeseen.

Keine jener grossen Consequenzen, welche sich an die Bank von England knüpften, waren darin vorgesehen.

English translation: None of those great consequences which came to be attached to the Bank of England were foreseen therein.

The eighteenth-century development proceeds through public debt and public cash. On the debt side, Philippovich emphasizes the incorporation of creditors into financial companies whose capital consisted in state obligations. The Bank, East India Company, and South Sea Company all belonged to this system, but the Bank survived as the enduring administrative body. Exchequer Bills, circulating and interest-bearing claims receivable in taxes, linked floating finance to Bank support; after the South Sea crisis, the Bank’s role in registering stock, transfers, dividends, warrants, and accounts became increasingly normal.

On the cash side, the transformation was slower and more practical. The older Treasury and Exchequer system dispersed receipt, payment, audit, and custody among many offices, leaving large balances in the hands of officials and creating delay, opacity, and private advantage. The Bank entered first through usage: public offices kept accounts there, clerks appeared at the Exchequer, and bank instruments replaced the physical movement of coin. Nineteenth-century reform then codified accumulated practice. From Burke’s criticisms through successive account commissions, army and revenue balances were centralized at the Bank; old Exchequer offices were abolished in 1834; and the Exchequer and Audit framework of 1866 joined issue control with appropriation audit under an independent Comptroller and Auditor General.

Philippovich’s mature institutional picture is of Treasury, Comptroller and Auditor General, Paymaster General, and Bank functioning as one administrative mechanism. Revenue accounts stand at the Bank; balances pass daily to the Exchequer Account; the Paymaster General makes payments through transfers, checks, and bills; temporary deficits are covered by Bank advances. This is the book’s central model of fiscal centralization:

Das Exchequerconto der englischen Finanzverwaltung bei der Bank von England ist das grossartigste Muster einer ökonomischen Centralisierung der Einnahmen und Ausgaben des Staates.

English translation: The Exchequer account of the English financial administration at the Bank of England is the grandest model of an economic centralization of the state's revenues and expenditures.

As debt office, the Bank prepares and issues Treasury Bills, Exchequer Bills, and Exchequer Bonds on Treasury order, receives proceeds for the Exchequer Account, pays interest and redemption, keeps stock ledgers, registers transfers, prepares dividend books, and manages unclaimed dividends. A private corporation thus becomes deeply embedded in the routine machinery of public administration.

The conclusion turns the history into a theory of bank-based fiscal management. England’s achievement is the fusion of public cash with the national banking system: idle treasury balances shrink, offices simplify, payments accelerate, transfers become cheaper, and state money enters circulation instead of lying isolated in public chests. Philippovich notes critically that England leaves more of the benefit of public balances to the Bank than systems such as Belgium’s, where the national bank invests disposable state funds for public account. Still, the larger result is decisive:

Durch die bankmässige Geldverwaltung tritt die Staatswirthschaft aus ihrer Isolierung heraus.

English translation: Through banking-style money management, the state economy emerges from its isolation.

The study’s significance lies in showing the modern fiscal state as a banking organism. Public administration, debt management, and money-market circulation become interdependent. But this also creates a political risk: the bank entrusted with the state’s cash acquires exceptional centrality, and the state cannot remain indifferent to the institution on which its own payments depend.