whether its transactions consisted in transfers in its books, or in payments in bank paper.

Confined to its primitive object of a chest, from which government might borrow, the Bank of St. George is an excellent institution for public credit ; it were to be wished that it had been imitated by the great powers of Europe, when they had recourse to loans. With the assistance of such a bank they would have avoided that confusion in their finances, which always proved so fatal to public credit, so injurious to the honour of governments, and so detrimental to the prosperity of empires.

The bank of Amsterdam was established in 1609, on the model of that of Venice; and it must be acknowledged to have been well adapted to the situation of that city, similar in almost every respect to that of Venice.

Like Venice, Amsterdam was then a staple-town, a perpetual fair, a market constantly open for the exchange of the produce of all climes, and of the industry of all nations. The sales and purchases of the productions of all countries were reciprocally paid by the intervention of the Amsterdam merchants, and the particular commerce of each state had only the balance of its trade to receive or to pay.

Had the merchants of Amsterdam always traded on their own account, like those of Lyons, and had they been able to fix the same term to their engagements, they might, like the Lyonese, have carried on their trade by simply exchanging the documents of their respective debts, as Lyons did for its own private trade.

But the immense extent of the payments which the merchants of Amsterdam had to make, would not allow their being effected by reciproeal exchanges of debts and demands at certain fixed times. Payments must be made daily, because they were daily wanted; and, in this respect, the bank of Venice suited Amsterdam better than a liquidation by the exchange of debts and demands, as used at Lyons.

By the charter of its foundation, the bank of Amsterdam was authorized to receive the deposit of any sum of money above three hundred gilders; and to pay all bills of exchange exceeding that sum by transfers in its books. The sums deposited were declared safe against any attachment; the city of Amsterdam guaranteed their safety, and engaged to represent them. The amount of these deposits has been estimated very high by some authors, and rather low by others. D'Avenant estimated them to amount to thirty-six millions sterling;* Adam Smith calculates them to amount only to about three millions sterling, or, at eleven gilders the pound sterling, thirty-three millions of gilders.†

Adam Smith was convinced that the deposits in the bank of Amsterdam had been faithfully respected. But a modern English author pretends, that when the French took possession of Holland, it was discovered that the bank had lent part of its deposits to the city of Amsterdam, and to the ancient government of

* New Dialogues, 1710.

+ Wealth of Nations, London, 1805, vol. ii. page 241.

Holland ;* but he does not quote the authority on which he grounds his assertion.

Henry Thornton's Inquiry into the Nature and Effects of the Paper Credit of England, pages 64 and 309.-Mr. Thornton's statements are these: "The Bank of Amsterdam did not issue circulating notes, but was a mere bank for deposits, the whole of which it was supposed by some to keep always in specie. It was discovered, however, when the French possessed themselves of Holland, that it had been used privately to lend a certain part of them to the city of Amsterdam, and a part to the old Dutch government. Neither of the two debts, as I understand, have yet (1802) been discharged." And, although Mr. Thornton quotes no authority, the fact is well known. The late Professor, J. G. Büsch of Hamburgh, in the first Appendix to his Dissertation on Banks, (which was republished after his death by his friend Ebeling, in 1801, under the title of J. G. Büsch's Sämtliche Schriften über Banken und Münzwesen,) states, § 2, page 159: "This is proved by what happened to the Bank of Amsterdam in 1790, when it was discovered that it had lent more of its original treasure to the state and to the East-India Company, than it should have done.” And, 6, page 166, he expressly states, that the directors acknowledged the fact. George Hassel, in his Statistical Account of the Kingdom of Holland, (Geographisch Statistischer Abriss des Königreichs Holland, Weimar, 1809,) also says, page 65, speaking of the Bank of Amsterdam: "Its credit had lately been impaired but the Directory of the Batavian Republic decreed a tax, on the 22d of June, 1802, for the purpose of remedying the deficit of the bank; by which means the bank money, which was at a discount of two per cent. bore again a premium of 4 per cent. in the end of the same month." These two authorities sufficiently vindicate Mr. Thornton's assertion, and, as I trust, the liberality of the French author will induce him to omit, in a second edition, the concluding sentence of his paragraph, which runs thus: "Mais il ne cite point l'autorité sur laquelle il fonde son assertion; de sorte qu'il est prudent de ne pas y croire," I have left it untranslated.-T.

The bank of Rotterdam, created in 1635, was also founded upon the model of that of Amsterdam.

So was the bank of Hamburgh in 1688.

In short, until the foundation of the Bank of England, all the banks, created after that of Venice, were deposit-banks, which effected the payments of those who had deposits with them, by transfers on their books; and of course rendered no other service to commerce than to avoid the charges of transport, to guard against errors in calculation and base coin, and to save the time which paying in metallic money requires.

By means of a blank check, with which the merchants of Amsterdam are furnished by the bank, and on which they write the sums which they wish to transfer, they may, without moving, pay more in one hour than they could do in a day, if they were obliged to pay in specie.

These advantages of banks must, no doubt have recommended them to the attention of the merchants and governments of all countries; and it appears unaccountable that such banks were not established every where in proportion as nations made any progress in commerce. It is as if nations were placed near each other merely to injure and destroy each other, and never to profit by their respective knowledge and discoveries; never to assist and help each other. They are not aware that the communication of knowledge and useful discoveries and the interchange of their produce would increase the mass of that produce, multiply their means of wealth in proportion to their respective labour, and afford them advantages which

are not to be found in their systems of exclusions and prohibitions, or in their mutual monopolies and hostilities.

Notwithstanding her extensive home and foreign trade; in spite of her efforts to pursue the career of wealth which the Dutch so successfully followed, and even to exclude them from that career; and notwithstanding her extreme attention to appropriate to herself every measure useful to commerce, England witnessed for near a century the success of the bank of Amsterdam without being sensible of its advantages, without being tempted to share them, and even without suspecting their existence.

It was the stadtholder of Holland, William III, to whom England entrusted her government, that first made her sensible of the importance and utility of a bank; and yet it was only after a very considerable time that his knowledge, his influence, and the convincing authority of experience, could naturalize such a banking establishment on a soil where it has so much prospered, and where it exhibits this very day one of the most extraordinary phenomena of commercial credit.

Many causes may be assigned for this inconceivable tardiness, as many causes account for the subsequent prodigious success of the Bank of England.

The Bank of England lost its way on its very outset. Instead of devoting itself to the commercial credit of which the banks of Amsterdam and Hamburgh had so ably laid the foundation, it endeavoured to revive public credit, and lent government the money which its shares had produced. The first operation of the bank confounded the commercial with the public