the measure has been attempted no-where else; or whether banking has appeared as it really is in every respect, preferable; the latter method has generally prevailed, and seems indeed entitled to the preference, because it furnishes circulation with means constantly proportioned to the prosperity of agriculture and industry.

The first bank that ever existed in Europe is that of Venice.

The republic smarting under the burden of a war with the emperor of the East in 1171, and being also engaged in hostilities with the emperor of the West, the doge or duke Michel II, after having exhausted all financial resources, recurred to a forced loan, borrowed from the wealthiest citizens. The creditors formed a board, which received the interest from government at the rate of four per cent. and divided it among its members in proportion to their contribution. This board afterwards formed the bank of Venice, the principal operations of which consisted in paying all commercial bills of exchange.

In 1423, its revenue amounted to about 1.200,000, sterling, and consisted chiefly in the interest paid by government. It is more than probable that it issued some paper-currency at that time for its operations. The fact, indeed, seems to be proved by the circumstance that a law was passed ordering that all payments of bills of exchange, which had been made in paper, should in future be effected in specie, under,a

* Sanuto, Vite de Duche di Venezia, Muratori Script. vol. xxii. col. 502.

penalty of one hundred ducats, or forty-five pounds sterling.*

Venice was at that time a manufacturing and staple town, and a place of great consumption.

The produce of its manufactures amounted to above twelve hundred thousand pounds sterling.

As a manufacturing town and a place of great consumption, it was the interest of Venice to economize the use of metallic money, the cost of which increased its expences and diminished its profits, and to supply its place by bank-paper.

As a staple-town, Venice wanted bank-paper for that portion of consigned commodities only which were appropriated to its consumption. With regard to the rest of the warehoused merchandize, which was

* Histoire de Venise, par Laugier. The Abbé Laugier, in the fifth volume, page 532, after having related the death of Thomas (or Tommaso) Mocenigo, the fifty-eighth doge or duke of Venice, which happened in 1423, adds: "Thomas Mocenigo fit faire un réglement très essentiel pour la sureté du commerce. Le change s'étoit fait jusques là en papier, il fut réglé qu'on le feroit à l'avenir en argent comptant sous peine de cent ducats d'amende." This fact, as it strengthens the opinion of those who think that the convertibility of bank notes into metallic money of proper weight and fineness, is the only way of keeping gold and silver in the country, is extremely remarkable. I have endeavoured to find a more ample statement of it in the old historians of Venice: but M. Ant. Sabellico, in his Historia Rerum Venetarum ab urbe condita, makes no mention of the fact; and Lod. Ant. Muratori, in his Annali d'Italia, second edition, Milan, 1753, vol. xiii, page 80, simply says: "Curiosissime sono le aringhe di questo doge, rapportate dal Sanuto, perchè ci fan tra l'altre cose vedere qual fosse allora l'opulenza dell' inclita citta di Venezia. Yet Sunuto, in his Vita Ducum Venetorum Italicè scriptæ apud Muratori, Rerum

to be conveyed to strangers, and which left only a commission to the Venitian merchants, the use of metallic currency was very immaterial, because the finding of the sums thus employed fell upon the foreign consumers. But as consumption is stimulated by cheapness and impeded by dearness, it was the interest of Venice, even as a staple-town, to economize the use of coin, because its cost was a dead loss to the consumer, and obstructed consumption.

Thus in the triple capacity of a manufacturing town, of a staple-town, and of a place of great consumption, it was the interest of Venice, that its commercial payments should be made in bank-paper.

But the wars in which the government of Venice was engaged with the Albanese and the dukes of Milan, occasioned considerable expences which could not be discharged otherwise than in metallic money. Commerce had not made sufficient progress, its resources were not sufficiently extensive, to relieve the wants of government and economize its expences; and as government considered payments in bank-paper as causing coin to disappear from circulation, or at least of rendering it more scarce, and making government purchase it at a higher price, it thought it had attained its end by ordering payments to be made in specie. Thus the interests of commerce often appear in opposition to the well or ill understood interests of government, and are sacrificed to it without any scruple.*

Italicarum Scriptores, vol. xxii. col. 885. and seq. does not allude to

the aforementioned circumstance.--T.

* In this case the interest of government was the interest of the country, to which the interests of commerce ought always to be

Whether this measure of the government of Venice induced the bank to cease paying in bank paper and to make its payments by transfers in its books, I do not know. But according to Macpherson,* the payments of the bank of Venice are made by mere transfers in its books.

The bank of Genoa, which was founded in 1407, and which owed its existence to the causes that had produced the bank of Venice, was formed upon the same model.†

The foreign and civil wars with which that republic was continually afflicted, forced its government to resort to loans bearing interest, the payment of which was provided for by certain demesnes, and the administration of these demesnes entrusted to a company of eight individuals chosen from among the state creditors. Their association constituted the Bank of St. George.

As the wants of the republic increased in proportion

sacrificed without any hesitation. The recommendation of the Report of the Bullion Committee to the House of Commons to compel the Bank of England to resume its payments in cash in a limited time, is, therefore, neither unprecedented, nor does it deserve the obloquy thrown upon it by Mr. John Hill and others.-T.

Annals of Commerce, vol. i. page 341.-Macpherson says: "The bank of Venice was established on such judicious principles, and has been conducted through the revolution of many centuries. with such prudence, that though the government have twice, since its establishment, made free with its funds, its credit has remained inviolate and unimpeached. Payments are made in it by transfers, or writing off the sum to be paid from the account of the payer to that of the receiver, without having the trouble of weighing gold or silver."

+ Histoire de Gênes, par Foglietta.

as its power declined, government continued to borrow of the Bank of St. George, and to assign a larger revenue to it; government even made over to the bank the property of several demesnes and important places, the administration of which was entrusted to a council of one hundred individuals, chosen among the holders of bank stock.

The historiographer of the republic of Genoa notices it as a circumstance worthy of admiration, that during the various changes to which the republic was exposed, and even when it passed under a foreign dominion, the government of the bank experienced no change but what change could a banking company experience, that confined itself to manage the common stock, collect its revenue, and distribute it to the parties concerned? The utmost that could be apprehended was infidelity or negligence in the management; and even this danger was sufficiently removed by the interested superintendance of a council composed of one hundred individuals. What is most to be wondered at is, that the republic, in the midst of its distresses and political troubles, never touched the property of the bank. A proposal of that tendency was made after the bombardment of Genoa, in 1684 but it was rejected, because to touch the money of the bank appeared too dangerous. It would, indeed, have been extremely dangerous, since there is every reason to suppose that the greatest part of the nation were interested in the safety of the property of the bank.

Moreover, I have not been able to discover what were the relations of the bank of Genoa to commerce;