The “Old Lady” refers to an informal, humorous name given to the Bank of England as a result of the public’s reaction to the Bank Restriction Act 1797. The source of the nickname is a caricature, depicting an old lady as a personification of the national bank being seduced and robbed. The caricature was given a long title, and the long version of the moniker mentioned there, the Old Lady of Threadneedle Street, is also in use. That long name refers to the bank’s location.
Brief historical account
The Bank of England, one of the world's oldest banks, was founded at the end of the 17th century as a way to resolve a financial problem of funding the construction of fleet. The undertaking of such an organization was successful, with more than one million pounds had been raised in 12 days, and the Bank of England quickly became the main banker for the government and a monetary authority, and served as an organizational example for many modern central banks.
The Bank of England wasn’t only a banker. Since its foundation, the Bank of England has controlled issuing of banknotes. That form of its activity was the key element of the 1797 event shown in the caricature with the old lady, although that wasn’t the first time the Bank faced difficulties. Its first serious problem occurred in 1720 after the sharp fall of the South Sea Company stock, which resulted in huge losses, and later, in 1772, it went through its first modern banking crisis called the British credit crisis.
The Bank of England was originally situated in Walbrook, and later was moved to Threadneedle Street, which is reflected in the Bank’s nickname the Old Lady.
Old Lady origins
As it has been stated above, the nickname Old Lady was given to the Bank of England after the publication of a cartoon criticizing the monetary policy of the then Prime Minister William Pitt the Younger, who was portrayed as a hustler attacking the Old Lady. The cartoon was triggered by the negative response of the society, especially of the Whig party, to the Pitt’s decision to temporarily stop redeeming banknotes for gold.
The economic situation of that period was heavily influenced by the war of the First Coalition, with gold reserves being significantly reduced, and banknotes being issued excessively. That led to two significant outcomes - a decrease in value of banknotes and banknote holders’ rush to convert it into gold, which created a danger of bankruptcy for the Bank of England.
A fear of possible bankruptcy dramatically increased after the Battle of Fishguard, when the French forces invaded Great Britain. A solution to the problem was found in total suspension of converting banknotes to gold, with the subsequent release of the Bank Restriction Act in 1797. Those actions weren’t generally approved by the public, with the Whig party being the most vocal protestor. The Prime Minister was often compared with a robber and a swindler at the time, and that comparison became an inspiration for the caricature in question.
The caricature itself represented the Bank of England as an old lady clothed in a dress of paper banknotes, while the Prime Minister William Pitt the Younger was depicted as a loathsome delinquent harassing her and stealing golden coins from her pockets at the same time.
The caricature was a success, and a link of the Bank of England to the old lady have since become popular and commonly used in different forms of media and in casual conversations.