During two centuries and a half the bank of Venice was unrivalled; for so gradual is the progress of improvement, that human knowledge is only matured by the experience of ages-and it was not until the year 1401, that the magistrates of Barcelona established a bank in that city. It was called the Table of Exchange, and was properly a bank of exchange and deposit. Foreign bills were negotiated with the same liberality as those of the citizens, and accommodations were extended to strangers as well as to natives. was altogether calculated for the encouragement of both external and internal commerce, and the funds of the city were pledged as security for the responsibility of the bank.

It

In the year 1407, the bank of Genoa commenced; but previous to this time, the republic borrowed large sums of money from the citizens, assigning certain branches of the revenue for the payment of the interest, and a board of management, composed of the most respectable citizens, was appointed to conduct the loans, pay the interest, and account to government for the funds intrusted to its care. From this circumstance, the Genoese claim the merit of establishing a bank as early as the Venetians; but it is evident that the transactions of this board were only an approximation to bankin. In process of time, however, the multiplicity and extent of these funds induced disorder and confusion, and it was deemed expedient to consolidate the whole into one capital stock, to be managed by a bank called the CHAMBER OF ST. GEORGE, to be governed by eight protectors, annually chosen, elected by the creditors and stockholders. Under this form of government, the affairs of the bank were prosperously conducted; but the further increase of the public debts, the accessions of towns and territories, among which was the little kingdom of Corsica, made the business of the bank much more complex; and the inconvenience of annual successions of new protectors becoming apparent, determined the Genoese, in the year 1444, to elect eight new

governors for the management of the bank, of which only two were to go out every year.

Before the discovery of the passage to the Indias, by the Cape of Good Hope, the Venetians enjoyed a monopoly of the lucrative trade of the east, by means of the Mamelukes of Egypt, with whom they were leagued by policy and interest, which diffused oppulence and wealth throughout Italy. This extensive commerce created and gave circulation to bills of exchange, the credit and currency of which were universally acknowledged when they bore the signature of the banks of Italy, and for several centuries there were no other establishments of the kind in Europe.

The BANK OF AMSTERDAM was established on the 31st of January, 1609. The magistrates of the city, under authority of the states, declared themselves the perpetual cashiers of the inhabitants, and that all payments above 600 gilders, but afterwards reduced to 300, and bills of exchange, shall be made in the bank; which obliged merchants to open accounts with it for the payment of their foreign bills. The extensive commerce of Amsterdam involved such a variety of transactions, that the expediency of regulating them became evident, and no measure could more effectually secure property, check lawsuits, and prevent frauds, than the establishment of a bank office, in which all receipts and payments were registered in books kept open for the purpose.

Dr. Smith ascribes the origin of this bank to the debased state of the current coin which the trade of Amsterdam brought from all quarters of Europe, and which was sold at a reduction of nine per cent. below the money of the mint. Merchants, in such cases, could not always find standard money to pay bills of exchange, the value of which was always uncertain; and accordingly operated against the United Provinces with foreign nations. But as the bank re

ceived the debased, light, or worn coin, at its intrinsic value, in the good money of the country, and gave credit for the amount in its books, an invariable standard was thus esta

blished, that tended greatly to simplify and facilitate the operations of commerce. The beneficial effects of this establishment in Holland were soon perceived, and bank money immediately bore a premium, or agio, which is a term to denote the difference of price between the money of the bank and the coin of the country. When we consider that coin is only a representative of commodities, and that its utility arises only from its being a generally acknowledged standard of value, by which mankind in the civilized state of society are enabled to calculate the price of articles of exchange, it is not surprising that bank receipts, which represent property also, and at the same time not liable to risk, danger, or deterioration of any kind, should be held in higher estimation than coin, which is exposed to robbery, and all sorts of casualties.

In all countries, where banks have been regular in their transactions, and their responsibility undoubted, their paper has carried a premium, more or less, according to circumstances, and the agio of Amsterdam was generally about five per cent.

The amount of capital of the bank of Amsterdam was never exactly ascertained. It was originally constituted by deposits of coin, and there was full value in its coffers for all the credits and receipts it issued. The bank, however, gave credit and receipts also upon deposits of gold and silver bullion, at the rate of five per cent. less than the mint price of such bullion, which was restored to the owner if he called for it within six months, upon paying one fourth per cent. if the deposit was in silver, or one half per cent. if in gold. But if the term of six months was allowed to expire, the bank retained the bullion at the price stated in its books.

The advantage of making deposits in this bank is twofold: first, the credit enables the merchant to pay his bills of exchange; second, the receipt gives him an opportunity of selling his bullion at an advance price, if the market should fluctuate in his favor. Although none can draw out bullion without producing a receipt, and reassigning bank money

eqnal to the price at which the bullion had been received, yet it is not absolutely necessary that both credit and receipt should always remain in the hands of the same person; as he who has the receipt will find bank money to buy at the market price, to enable him to relieve the bullion, and the owner of the credit will at all times find receipts in abundance; but to prevent any extraordinary rise in the price of bank money, or receipts, which speculation or other causes might sometimes induce, the bank adopted the resolution of selling bank money for the current coin, at an agio of five per cent., and buying it at the rate of four.

The city is guaranty that there shall always be full value in the bank to answer all its demands; and as the directors, who are annually changed, compare the treasure with the books, under solemn oath; so that there can be no probability of fraud.

The four reigning burgomasters are invested with the direction of the bank, and the city of Amsterdam derives a considerable revenue from it, which arises from the following sources for all deposits, a fourth or half per cent. must be paid; from every person who opens an account, a fee of ten gilders is exacted, and for every additional account, three gilders three stivers; for every transfer, two stivers, or six stivers if the transfer be less than three hundred gilders. If any person shall overdraw his account, he is fined three per cent. on the amount, and his order is set aside. There is also a considerable profit on the sale of foreign coin, or bullion, which is always kept till it can be sold to advantage; and likewise by selling bank money, at five per cent. agio, and buying it at four. Through these various resources, the bank of Amsterdam became rich and prosperous, and it was supposed to retain in its repositories more gold and silver than any other establishment of the kind in Europe.

15

BANK OF ENGLAND,

CHARTERED IN THE YEAR 1694.

Previous to the year 1694 there were only four considerable banks in Europe; but on the 27th July, of that year, a charter was granted by William and Mary, for establishing the bank of England; which, for opulence, and extent of circulation, is now the greatest in the world. The charter was granted for the term of twelve years, and the corporation was determinable on a year's notice. The original capital, subscribed by the propriers,

was £1,200,000 sterling, or $5,333,3331, in consideration of loaning to the government the same sum, £1,200,000; for which they received an interest of eight per cent. amounting to $426,666. By an act of parliament, in the 8th and 9th of William, they were allowed to enlarge their

capital stock to £2,201,171.10, or $9,782,984.44. At this time the bank agreed to deliver up to the government, so many exchequer bills as

amounted to £2,000,000 or $8,888,888.88.

and to accept an annuity therefor, of the

sum of £100,000, or $444,444.44. The bank then agreed to lend to government, by contract, £1,000,000, or $4,444,444.44.

on demand,

In order to enable them to circulate exchequer bills, they established what is now called bank circulation; the nature of which may be understood by what follows: The company of the bank are obliged to keep cash in hand, sufficient, not only to answer their common, but also any extraordinary demand that may be made upon them; and what they have over they employ in the trade of the company. But when the bank entered into the above contract, as they did not keep unemployed a larger sum of money than what they deemed