to be assumed that the Act, in reference to its objects, expressed the sum of human wisdom. No occasion arose for inquiry and investigation till the phenomena to which it gave rise were erected into maxims or rules, which from that to the present time have held unquestioned sway over the opinions and judgment, not only of the people of England, but of the world. In 1713, the charter of the Bank was again extended till twelve months' notice after August 1, 1742. In 1716, it advanced to government £2,000,000; and, in 1721, £4,000,000. Of these sums, £275,027 178. 10d. were repaid to the Bank; so that its share capital stood upon their payment in 1738 at £9,100,000. In 1742, its charter was extended till twelve months' notice after August 1, 1764; the Bank advancing to the government £2,586,800, increasing its capital to £11,686,800. In 1764, the charter was extended till twelve months' notice after August 1, 1786; in 1781, till twelve months' notice after August 1, 1812; in 1800, till twelve months' notice after August 1, 1833. In 1816, the Bank was authorized to increase its capital from £11,686,800 to £14,553,000, being an addition of twenty-five per cent to its stock; the increase being paid by, and representing, a portion of its accumulated or net earnings, which on the 29th February, 1816, equalled £8,639,000. The Act of 1816 provided for the payment by the government of one quarter of the advances made by the former, reducing the debt of the government to it, to £11,015,100. Although the Bank, for almost the whole of the first century of its existence, was forbidden by its charter to make any advances to government, it acted from the outset as its fiscal agent in collecting and disbursing its revenues, and in paying the interest upon the public debt. Although the government in establishing the Bank had no higher or broader purpose than temporary relief from a present emergency, it was no sooner set in motion than its operations, whatever may have been thought of its conduct in aftertimes, were immediately followed by the most beneficent results. Its notes served for the collection and disbursement of the revenues; while such as were not required for these purposes were fully employed in the distribution of merchandise. It laid, in fact, the foundation of that manufacturing, commercial, and political supremacy which enabled England to wield for dwelling so long upon the present subjects was to prevent so very important a truth as that which relates to the good faith that ought to be maintained with regard to the coinage, from being placed on what I conceive to be an unsound foundation; and,' he continues, quoting approvingly from Law, "money is not the value for which goods are exchanged, but the value by which they are exchanged." i Now, if value be wholly abstracted from money, what harm can come of the arbitrary operations of princes in coinage? They never change the denominations of the coin they debase. If the sole use of money, as asserted by Stewart, be to assist in numeration and arithmetic, then the different denominations of coin have only the force of numerals; and a piece of leather upon which is imprinted the word "dollar" is in its proper essence the same thing as a piece of gold upon which the same. word is impressed. Hume was more logical and consistent. Agreeing with Stewart that the only value of money, as such, was to assist in numeration and arithmetic, he took the ground that the currency should be debased, as the means of eliminating value from it; naïvely remarking, that such debasement should be effected in such a sly way that the people should not discover the swindle. Of the two, Hume is to be preferred. The admission that the debasement was a swindle had the merit, at least, of putting the people on their guard. It suggested reasons for inquiry and investigation; while Stewart, assuming similar grounds to Hume as to the nature of money, while expressing horror at the legitimate consequences of his doctrines, leaves the reader without even a thread to lead him out of the labyrinth in which he is involved. Again : "From the functions of the precious metals as media of exchange," says Stewart," they gradually and naturally came to form the common scale of valuation. For this end, indeed, they are naturally adapted, from the mathematical exactness with which metals, in consequence of their divisibility and fusibility, are fitted. to express every conceivable variation of value, a quality, indeed, of so much importance in their use as money that it probably contributed more than any thing else to establish their employment among commercial nations. The existence, too, of such a standard would necessarily render the ideas of relative value much more 1 Lectures on Political Economy, Part. i. Book ii. precise and definite than they otherwise would have been, by leading men to an arithmetical statement of relations which, in the infancy of commerce, would have been estimated in a very gross and inaccurate manner." 1 In the preceding paragraph, in place of "standard of value," Stewart has" scale of valuations." He certainly has the advantage of Smith and the Economists in the accuracy of his definitions. It would be a contradiction in terms to call that a standard of value which had no value. A thing may be a scale, without being a standard. A yardstick is a scale for measuring distance or extension, but not the standard of distance or extension. : If all value is to be abstracted from money, then of what advantage are the qualities of divisibility and fusibility, in the materials composing it? Why not have the denominations which are fitted to express "every conceivable variation of value" all of the same size and fineness? A bank-note for a thousand dollars has precisely the same size and quality of material as a note for one dollar. The only difference is in their inscriptions. There could be no possible advantage in making the size of the notes correspond with their nominal values in making, say, the surface of a dollar note equal to one square inch, and the surface of a thousand dollar note equal to a thousand square inches. According to Stewart's theory, the qualities which fit gold and silver for moneydivisibility and fusibility — are of the least importance; for pieces of similar size may be made by their inscriptions to express"every conceivable variation of value." The existence of a scale of valuation like that proposed by him would, he says, render the ideas of value much more precise and definite than they otherwise would have been. But how can ideas of relative value be made more precise by comparing them with a scale from which all value is abstracted? How can nothing be made to be the measure of the value of something? A definite idea is conveyed in the statement that a gold dollar measures the value of a bushel of corn; but what idea can be formed of the value of the corn from a statement that its value is that expressed upon a worthless piece of leather or paper? 1 Lectures on Political Economy, Part i. Book ii. 12 * paramo ant inff ence over the destinies of mankind. While the paper issued by a Bank, that it may return without effort on its part, should always symbolize merchandise, it is perfectly competent for a government, without a dollar in its vaults, to issue a currency which shall, by its power of levying and collecting taxes, return to it automatically, after having performed all the functions that could have been performed by coin in a similar use. If its revenues equal, say, £30,000,000 annually, and it issue during the year £10,000,000 of its notes receivable in the payment of taxes, these would (the taxes being certain to be paid) be maintained very nearly or quite at the par of coin, from the uses they served. If they would pay taxes equally with coin, they would be preferred by taxpayers to coin. The debts due from the people to the government and taxes that are levied may be called suchare a consideration which may give its notes a high value. Such debta take the place of merchandise, which must form the basis and security of loans made by Banks. A considerable portion of the issues of the Bank were from the outset constantly employed by the public in manner described, and returned to the former as its fiscal agent. Such as were not taken in in this manner were sufficiently provided for by the commercial paper discounted; the deposits in the form of coin providing adequate reserves. The issues of the Bank, compared with their present magnitude, were for a long time on a small sosia Its notes in circulation, from 1694 to 1716, averaged only about £800,000 annually. From 1716 to 1770, Te atrast average did not much exceed £4,000,000; and fon 1770 to the suspension of payments in 1797, only about Ape Rock, so the issuer and manager of the curfood ent in hold novel, and was for a long time the --ampola" sampay, it was at në period the only one. myhunk at Landar, wert accustomed. davad, than sun'a i ri the gold en 1 Anna & my lier to re The receipts given for deposits would naturally circulate as currency. In time, checks were drawn against them; so that, before the establishment of the Bank of England, the greater part of the surplus cash of the merchants was regularly deposited, and was loaned, drawn upon, and disbursed, precisely as are deposits with London bankers at the present day. The establishment of the Bank was violently opposed by the goldsmiths, the bankers of that time, — and undoubtedly made a serious inroad upon their operations. As, however, every great institution like the Bank must regulate its affairs by strict and inexorable rules, the mass of borrowers would prefer to deal with private bankers, although paying a greater rate of interest, from the better accommodations they could secure ; so that, during the whole period of its existence, large amounts of loans were made, and paper discounted, by private bankers, whose issues, in form and kind, were precisely similar to those made by the Bank. After the relations of the latter to the government became changed, so that it could rely upon it as its chief customer, the Bank naturally withdrew from the field of discount, leaving it in the hands of private parties; although during the period of Restriction, when it was under no obligation to take in its notes in coin, it discounted business paper very largely. It ceased to be, relatively, the great instrument of commerce it once was; and was content to loan its deposits on the highest form of security at very low rates, certain from their amount of being constantly in the receipt of very large revenues. While the Bank has had the competition of private bankers during the whole period of its existence, a competition so effective as to drive it in great measure out of the discount market of the metropolis, it has for the last hundred years had that of country Banks, which at one time rivalled it in the amount of their note circulation, and, perhaps, far exceeded it in the extent of their operations. By common law, any person might become a banker, might issue notes and receive deposits; or, to quote the language of Lord Liverpool in a speech delivered in Parliament in 1826, when the subject of authorizing joint-stock Banks was under consideration: "small tradesmen -a cheesemonger, a butcher, or a shoemaker, may open a Bank. The exclusive privileges of the Bank of England do not touch such cases; but an association of persons |