in Commerce, a common repository, where many persons agree to keep their money, to be always ready at their call or direction: or, certain societies or communities, who take the charge of other people's money, either to improve it, or to keep it secure.

The first institution of banks was in Italy, where the Lombard Jews kept benches in the market-places for the exchange of money and bills; and banco being the Italian name for bench, banks took their title from this word.

Banks are of two principal kinds. 1. One sort is either public, consisting of a company of moneyed men, who being duly established, and incorporated by the laws of their country, agree to deposit a considerable fund, or joint stock, to be employed for the use of the society, as in lending money upon good security, buying and selling bullion, discounting bills of exchange, &c.: or private, i.e. set up by private persons, or partnerships, who deal in the same way as the former upon their own single stock and credit.

The greatest bank of circulation in Europe is the Bank of England. The company was incorporated by parliament in the fifth and sixth years of King William and Queen Mary, by the name of The Governors and Company of the Bank of England: in consideration of the loan of 1,200,000l. granted to the government; for which the subscribers received almost 8 per cent. By this charter, the company are not to borrow under their common seal, unless by act of parliament; they are not to trade, or suffer any person in trust for them to trade, in any goods or merchandise; but they may deal in bills of exchange, in buying or selling bullion, and foreign gold and silver coin, &c.

By an act of parliament passed in the 8th and 9th years of William III. they were empowered to enlarge their capital stock to 2,201,171l. 10s. It was then also enacted, that bank-stock should be a personal, and not a real estate; that no contract either in word or writing for buying or selling bank-stock, should be good in law, unless registered in the books of the bank within 7 days, and the stock transferred in 14 days; and that it shall be felony, without benefit of clergy, to counterfeit the common seal of the bank, or any fealed bank-bill, or any bank-note, or to alter or erafe such bills or notes. By another act passed in the 7th of Queen Anne, the company were empowered to augment their capital to 4,402,343l. and they then advanced 400,000l. more to the government; and in 1714, they advanced another loan of 1,500,000l.

In the third year of the reign of King George I. the interest of their capital stock was reduced to 5 per cent. when the bank agreed to deliver up as many exchequer bills as amounted to 2,000,000l. and to accept an annuity of 100,000l. and it was declared lawful for the bank to call from their members, in proportion to their interests in the capital stock, such sums of money as in a general court should be found necessary. If any member should neglect to pay his share of the moneys so called for, at the time appointed by notice in the London Gazette, and fixed upon the Royal Exchange, it should be lawful for the bank, not only to stop the dividend of such member, and to apply it towards payment of the money in question, but also to stop the transfers of the share of such defaulter, and to charge him with an interest of 5 per cent. per annum, for the money so omitted to be paid; and if the principal and interest should be three months unpaid, the bank should then have power to sell so much of the stock belonging to the defaulter as would satisfy the same. After this, the bank reduced the interest of the 2,000,000l. lent to the government, from 5 to 4 per cent. and purchased several other annuities, which were afterwards redeemed by the government, and the national debt due to the bank reduced to 1,600,000l. But in 1742, the company engaged to supply the government with 1,600,000l. at 3 per cent. which is now called the 3 per cent. annuities; so that the government was now indebted to the company 3,200,000l. the one half carrying 4, and the other 3 per cent.

In the year 1746, the company agreed that the sum of 986,800l. due to them in the exchequer bills uncancelled, on the duties for licences to sell spirituous liquors by retail, should be cancelled, and in lieu thereof to accept of an annuity of 39,442l. the interest of that sum at 4 per cent. The company also agreed to advance the further sum of 1,000,000l. into the exchequer, upon the credit of the duties arising by the malt and land tax at 4 per cent. for exchequer bills to be issued for that purpose; in consideration of which, the company were enabled to augment their capital with 986,800l. the interest of which, as well as that of the other annuities, was reduced to 3\( \frac{1}{2} \) per cent. till the 27th of December 1757, and from that time to carry only 3 per cent.

And in order to enable them to circulate the said exchequer bills, they established what is now called bank circulation. The nature of which may be understood from what follows.

The company of the bank are obliged to keep cash sufficient not only to answer the common, but also any extraordinary demand that may be made upon them; and whatever money they have by them, over and above the sum supposed necessary for these purposes, they employ in what may be called the trade of the company; that is to say, in discounting bills of exchange, in buying of gold and silver, and in government securities, &c. But when the bank entered into the above-mentioned contract, as they did not keep unemployed a larger sum of money than what they deemed necessary to answer their ordinary and extraordinary demands, they could not conveniently take out of their current cash so large a sum as a million, with which they were obliged to furnish the government, without either lessening that sum they employed in discounting, buying gold and silver, &c. (which would have been very disadvantageous to them), or inventing some method that should answer all the purposes of keeping the million in cash. The method which they chose, and which fully answers their end, was as follows:

They opened a subscription, which they renew annually, for a million of money; wherein the subscribers advance 10 per cent. and enter into a contract to pay the remainder, or any part thereof, whenever the bank shall call upon them, under penalty of forfeiting the 10 per cent. so advanced: in consideration of which, the bank pays the subscribers 4 per cent. interest for the money paid in, and \( \frac{1}{4} \) per cent. for the whole sum they agree to furnish; and in case a call shall be made upon them for the whole, or any part thereof, the bank further agrees to pay them at the rate of 5 per cent. per annum for such sum till they repay it, which they are under an obligation to do at the end of the year. By this means the bank obtains all the purposes of keeping a million of money by them; and though the subscribers, if no call is made upon them (which is in general the case), receive 6\( \frac{1}{2} \) per cent. for the money they advance, yet the company gains the sum of 23,500l. per annum by the contract; as will appear by the following account:

The bank receives from the government for the advance of a million L. 30,000 The bank pays the subscribers who advance 100,000l. and engage to pay (when called for) 900,000l. more 6,500

The clear gain to the bank therefore is 23,500

This is the state of the case, provided the company should make no call on the subscribers; which they will be very unwilling to do, because it would not only lessen their profit, but affect the public credit in general.

Bank-stock may not improperly be called a trading stock, since with this they deal very largely in foreign gold and silver, in discounting bills of exchange, &c. Besides which, they are allowed by the government very considerable sums annually for the management of the annuities paid at their office. All which advantages render a share in their stock very valuable; though it is not equal in value to the East India stock. The company make dividends of the profits half yearly, of which notice is publicly given; when those who have occasion for their money may readily receive it; but private persons, if they judge convenient, are permitted to continue their funds, and to have their interest added to the principal.

This company is under the direction of a governor, deputy-governor, and 24 directors, who are annually elected by the general court, in the same manner as in the East India Company. Thirteen, or more, compose a court of directors for managing the affairs of the company. The officers of this company are very numerous.

The stability of the bank of England is equal to that of the British government. All that it has advanced to the public must be lost before its creditors can sustain any loss. No other banking company in England can be established by act of parliament, or can consist of more than fix members. It acts, not only as an ordinary bank, but (as we have already seen) as a great engine of state; receiving and paying the greater part of the annuities which are due to the creditors of the public; circulating exchequer bills; and advancing to government the annual amount of the land and malt taxes, which are frequently not paid up till some years thereafter. It likewise has, upon several different occasions, supported the credit of the principal houses, not only in England, but of Hamburgh and Holland. Upon one occasion it is said to have advanced for this purpose, in one week, about 1,600,000l. a great part of it in bullion.

In Scotland there are two public banks, both at Edinburgh. The one, called The Bank of Scotland, was established by act of parliament in 1695; the other, Scotch called The Royal Bank, by royal charter in 1727.

Within these 30 years there have also been erected private banking companies in almost every considerable town, and even in some villages. Hence the business of the country is almost entirely carried on by paper-currency, i.e. by the notes of those different banking companies; with which purchases and payments of all kinds are commonly made. Silver very seldom appears, except in the change of a twenty-shilling bank-note, and gold till seldom. But though the conduct of all those different companies has not been unexceptionable, and has accordingly required an act of parliament to regulate it; the country, notwithstanding, has evidently derived great benefit from their trade. It has been asserted, that the trade of the city of Glasgow doubled in about 15 years after the first erection of the banks there; and that the trade of Scotland has more than quadrupled since the first erection of the two public banks at Edinburgh. Whether the trade, either of Scotland in general, or of the city of Glasgow in particular, has really increased in so great a proportion, during so short a period, we do not pretend to know. If either of them has increased in this proportion, it seems to be an effect too great to be accounted for by the sole operation of this cause. That the trade and industry of Scotland, however, have increased very considerably during this period, and that the banks have contributed a good deal to this increase, cannot be doubted.

The value of the silver money which circulated in Smith's Scotland before the Union in 1707, and which immediately after it was brought into the bank of Scotland Nation, in order to be recoined, amounted to 411,117l. 10s. 9d. chap. ii. sterling. No account has been got of the gold coin: but it appears from the ancient accounts of the mint of Scotland, that the value of the gold annually coined somewhat exceeded that of the silver. There were a good many people too upon this occasion, who, from a diffidence of repayment, did not bring their silver into the bank of Scotland; and there was, besides, some English coin, which was not called in. The whole value of the gold and silver, therefore, which circulated in Scotland before the Union, cannot be estimated at less than a million sterling. It seems to have constituted almost the whole circulation of that country; for though the circulation of the bank of Scotland, which had then no rival was considerable, it seems to have made but a very small part of the whole. In the present times, the whole circulation of Scotland cannot be estimated at less than two millions, of which that part which consists of gold and silver most probably does not amount to half a million. But though the circulating gold and silver of Scotland have suffered so great a diminution during this period, its real riches and prosperity do not appear to have suffered any. Its agriculture, manufactures, and trade, on the contrary, the annual produce of its land and labour, have evidently been augmented.

It is chiefly by discounting bills of exchange, that Dicounts, by advancing money upon them before they are due, that the greater part of banks and bankers issue bills. Their promissory notes. They deduct always upon what- Bank. ever sum they advance, the legal interest till the bill shall become due. The payment of the bill, when it becomes due, replaces to the bank the value of what had been advanced, together with a clear profit of the interest. The banker, who advances to the merchant whose bill he discounts not gold and silver, but his own promissory notes, has the advantage of being able to discount to a greater amount, by the whole value of his promissory notes, which he finds by experience are commonly in circulation. He is thereby enabled to make his clear gain of interest on so much larger a sum.

The commerce of Scotland, which at present is not very great, was still more inconsiderable when the two first banking companies were established; and those companies would have had but little trade, had they confined their business to the discounting of bills of exchange. They invented, therefore, another method of issuing their promissory notes, by granting what they called cash accounts; that is, by giving credit to the extent of a certain sum (2000l. or 3000l. for example), to any individual who could procure two persons of undoubted credit and good landed estate to become surety for him, that whatever money should be advanced to him within the sum for which the credit had been given should be repaid upon demand, together with the legal interest. Credits of this kind are commonly granted by banks and bankers in all different parts of the world. But the easy terms on which the Scots banking companies accept of repayment are peculiar to them, and have perhaps been the principal cause, both of the great trade of those companies and of the benefit which the country has received from it.

Whoever has a credit of this kind with one of those companies, and borrows 1000l. upon it, for example, may repay this sum piecemeal, by 20l. and 30l. at a time, the company discounting a proportionable part of the interest of the great sum from the day on which each of those small sums is paid in, till the whole be in this manner repaid. All merchants, therefore, and almost all men of business, find it convenient to keep such cash-accounts with them; and are thereby interested to promote the trade of those companies, by readily receiving their notes in all payments, and by encouraging all those with whom they have any influence to do the same. The banks, when their customers apply to them for money, generally advance it to them in their own promissory notes. These the merchants pay away to the manufacturers for goods, the manufacturers to the farmers for materials and provision, the farmers to their landlords for rent, the landlords repay them to the merchants for the conveniences and luxuries with which they supply them, and the merchants again return them to the banks in order to balance their cash-accounts, or to replace what they may have borrowed of them; and thus almost the whole money-business of the country is transacted by means of them. Hence the great trade of those companies.

By means of those cash-accounts, every merchant can, without imprudence, carry on a greater trade than he otherwise could do. If there are two merchants, one in London and the other in Edinburgh, who employ equal stocks in the same branch of trade, the Edinburgh merchant can, without imprudence, carry on a greater trade, and give employment to a greater number of people, than the London merchant. The London merchant must always keep by him a considerable sum of money, either in his own coffers, or in those of his banker (who gives him no interest for it), in order to answer the demands continually coming upon him for payment of the goods which he purchases upon credit. Let the ordinary amount of this sum be supposed 500l. The value of the goods in his warehouse must always be less by 500l. than it would have been, had he not been obliged to keep such a sum unemployed. Let us suppose that he generally disposes of his whole stock upon hand, or of goods to the value of his whole stock upon hand, once in the year. By being obliged to keep such a great sum unemployed, he must sell in a year 500l. worth less goods than he might otherwise have done. His annual profits must be less by all that he could have made by the sale of 500l. worth more goods; and the number of people employed in preparing his goods for the market, must be less by all those that 500l. more stock could have employed. The merchant in Edinburgh, on the other hand, keeps no money unemployed for answering such occasional demands. When they actually come upon him, he satisfies them from his cash-account with the bank, and gradually replaces the sum borrowed with the money or paper which comes in from the occasional sales of his goods. With the same stock, therefore, he can, without imprudence, have at all times in his warehouse a larger quantity of goods than the London merchant; and can thereby both make a greater profit himself, and give constant employment to a greater number of industrious people who prepare those goods for the market. Hence the great benefit which the country has derived from this trade.

The late multiplication of banking companies in both parts of the united kingdom, an event by which many people have been much alarmed, instead of diminishing, increases the security of the public. It obliges all of them to be more circumspect in their conduct, and, by not extending their currency beyond its due proportion to their cash, to guard themselves against those malicious runs which the rivalry of so many competitors is always ready to bring upon them. It restrains the circulation of each particular company within a narrower circle, and reduces their circulating notes to a smaller number. By dividing the whole circulation into a greater number of parts, the failure of any one company, an accident which, in the course of things, must sometimes happen, becomes of less consequence to the public. This free competition too obliges all bankers to be more liberal in their dealings with their customers, lest their rivals should carry them away. In general, if any branch of trade, or any division of labour, be advantageous to the public, the freer and more general the competition, it will always be the more so. See further, the article Paper Money.

2. The other kind of banks consist of such as are instituted wholly on the public account, and are called of deposit. Banks of Deposit; the nature of which not being generally understood, the following particular explanation may not be unacceptable.

The currency of a great state, such as Britain, generally generally consists almost entirely of its own coin. Should this currency, therefore, be at any time worn, clipt, or otherwise degraded below its standard value, the state by a reformation of its coin can effectually re-establish its currency. But the currency of a small state, such as Genoa or Hamburgh, can seldom consist altogether in its own coin, but must be made up, in a great measure, of the coins of all the neighbouring states with which its inhabitants have a continual intercourse. Such a state, therefore, by reforming its coin, will not always be able to reform its currency. If foreign bills of exchange are paid in this currency, the uncertain value of any sum, of what is in its own nature so uncertain, must render the exchange always very much against such a state, its currency being, in all foreign states, necessarily valued below even what it is worth.

In order to remedy the inconvenience to which this disadvantageous exchange must have subjected their merchants, such small states, when they began to attend to the interest of trade, have frequently enacted, that foreign bills of exchange of a certain value should be paid, not in common currency, but by an order upon, or by a transfer in, the books of a certain bank, established upon the credit and under the protection of the state; this bank being always obliged to pay, in good and true money, exactly according to the standard of the state. The banks of Venice, Genoa, Amsterdam, Hamburgh, and Nuremberg, seem to have been all originally established with this view, though some of them may have afterwards been made subservient to other purposes. The money of such banks, being better than the common currency of the country, necessarily bore an agio, which was greater or smaller, according as the currency was supposed to be more or less degraded below the standard of the state. The agio of the bank of Hamburgh, for example, which is said to be commonly about 14 per cent. is the supposed difference between the good standard money of the state, and the clipt, worn, and diminished currency poured into it from all the neighbouring states.

Before 1609, the great quantity of clipt and worn foreign coin, which the extensive trade of Amsterdam brought from all parts of Europe, reduced the value of its currency about 9 per cent. below that of good money fresh from the mint. Such money no sooner appeared, than it was melted down or carried away, as it always is in such circumstances. The merchants, with plenty of currency, could not always find a sufficient quantity of good money to pay their bills of exchange; and the value of those bills, in spite of several regulations which were made to prevent it, became in a great measure uncertain. In order to remedy these inconveniences, a bank was established in 1609 under the guarantee of the city. The bank received both foreign coin, and the light and worn coin of the country, at its real and intrinsic value in the good standard money of the country, deducting only so much as was necessary for defraying the expense of coinage, and other necessary expense of management. For the value which remained after this small deduction was made, it gave a credit in its books. This credit was called bank money; which, as it represented money exactly according to the standard of the mint, was always of the same real value, and intrinsically worth more than current money. It was at the same time enacted, that all bills drawn upon or negotiated at Amsterdam of the value of 600 guilders and upwards should be paid in bank-money, which at once took away all uncertainty in the value of those bills. Every merchant, in consequence of this regulation, was obliged to keep an account with the bank in order to pay his foreign bills of exchange, which necessarily occasioned a certain demand for bank-money.

Bank-money, over and above both its intrinsic superiority to currency, and the additional value which this demand necessarily gives it, has likewise some other advantages. It is secure from fire, robbery, and other accidents; the city of Amsterdam is bound for it; it can be paid away by a simple transfer, without the trouble of counting, or the risk of transporting it from one place to another. In consequence of these different advantages, it seems from the beginning to have born an agio; and it is generally believed that all the money originally deposited in the bank was allowed to remain there, nobody caring to demand payment of a debt which he could sell for a premium in the market. Besides, this money could not be brought from those coffers, as it will appear by and by, without previously paying for the keeping.

Those deposits of coin, or which the bank was bound to restore in coin, constituted the original capital of the bank, or the whole value of what was represented by what is called bank-money. At present they are supposed to constitute but a very small part of it. In order to facilitate the trade in bullion, the bank has been for these many years in the practice of giving credit in its books upon deposits of gold and silver bullion. This credit is generally about 5 per cent. below the mint price of such bullion. The bank grants at the same time what is called a receipt or receipt, entitling the person who makes the deposit, or the bearer, to take out the bullion again at any time within six months, upon re-transferring to the bank a quantity of bank-money equal to that for which credit had been given in its books when the deposit was made, and upon paying \( \frac{1}{2} \) per cent. for the keeping if the deposit was in silver, and \( \frac{1}{2} \) per cent. if it was in gold; but at the same time declaring, that in default of such payment, and upon the expiration of this term, the deposit should belong to the bank at the price at which it had been received, or for which credit had been given in the transfer books. What is thus paid for the keeping of the deposit may be considered as a sort of warehouse-rent; and why this warehouse-rent should be so much dearer for gold than for silver, several different reasons have been assigned. The fineness of gold, it has been said, is more difficult to be ascertained than that of silver. Frauds are more easily practised, and occasion a greater loss in the more precious metal. Silver, besides, being the standard metal, the state, it has been said, wishes to encourage more the making of deposits of silver than those of gold.

Deposits of bullion are most commonly made when the price is somewhat lower than ordinary; and they are taken out again when it happens to rise. In Holland the market price of bullion is generally above the mint price, for the same reason that it was so in England before the late reformation of the gold coin. The difference is said to be commonly from about fix to Bank. sixteen slivers upon the mark, or eight ounces of silver of eleven parts fine and one part alloy. The bank-price, or the credit which the bank gives for deposits of such silver (when made in foreign coin, of which the fineness is well known and ascertained, such as Mexico dollars), is 22 gilders the mark; the mint-price is about 23 gilders; and the market-price is from 23 gilders fix slivers to 23 gilders 16 slivers, or from 2 to 3 per cent. above the mint-price. The proportion between the bank-price, the mint-price, and the market-price, of gold bullion, are nearly the same. A person can generally fell his receipt for the difference between the mint-price of bullion and the market-price. A receipt for bullion is almost always worth something; and it very seldom happens therefore that anybody suffers his receipt to expire, or allows his bullion to fall to the bank at the price at which it had been received, either by not taking it out before the end of the fix months, or by neglecting to pay the \( \frac{1}{4} \) or \( \frac{1}{2} \) per cent. in order to obtain a new receipt for another fix months. This, however, though it seldom happens, is said to happen sometimes, and more frequently with regard to gold than with regard to silver, on account of the higher warehouse-rent which is paid for the keeping of the more precious metal.

The person who by making a deposit of bullion obtains both a bank-credit and a receipt, pays his bills of exchange as they become due with his bank-credit; and either sells or keeps his receipt, according as he judges that the price of bullion is likely to rise or to fall. The receipt and the bank-credit seldom keep long together, and there is no occasion that they should. The person who has a receipt, and who wants to take out bullion, finds always plenty of bank-credits, or bank-money, to buy at the ordinary price; and the person who has bank-money, and wants to take out bullion, finds receipts always in equal abundance.

The owners of bank-credits and the holders of receipts constitute two different sorts of creditors against the bank. The holder of a receipt cannot draw out the bullion for which it is granted, without re-aligning to the bank a sum of bank-money equal to the price at which the bullion had been received. If he has no bank-money of his own, he must purchase it of those who have it. The owner of bank-money cannot draw out bullion without producing to the bank receipts for the quantity which he wants. If he has none of his own, he must buy them of those who have them. The holder of a receipt, when he purchases bank-money, purchases the power of taking out a quantity of bullion, of which the mint-price is 5 per cent. above the bank-price. The agio of 5 per cent. therefore, which he commonly pays for it, is paid not for an imaginary, but for a real value. The owner of bank-money, when he purchases a receipt, purchases the power of taking out a quantity of bullion, of which the market-price is commonly from 2 to 3 per cent. above the mint-price. The price which he pays for it, therefore, is paid likewise for a real value. The price of the receipt, and the price of the bank-money, compound or make up between them the full value or price of the bullion.

Upon deposits of the coin current in the country, the bank grants receipts likewise as well as bank-credits; but those receipts are frequently of no value, and will bring no price in the market. Upon ducatoons, for example, which in the currency pass for three gilders three slivers each, the bank gives a credit of three gilders only, or 5 per cent. below their current value. It grants a receipt likewise entitling the bearer to take out the number of ducatoons deposited at any time within fix months, upon paying \( \frac{1}{4} \) per cent. for the keeping. This receipt will frequently bring no price in the market. Three gilders bank-money generally fell in the market for three gilders three slivers, the full value of the ducatoons if they were taken out of the bank; and before they can be taken out, \( \frac{1}{4} \) per cent. must be paid for the keeping, which would be mere los to the holder of the receipt. If the agio of the bank, however, should at any time fall to 3 per cent. such receipts might bring some price in the market, and might fell for \( 1\frac{1}{2} \) per cent. But the agio of the bank being now generally about 5 per cent. such receipts are frequently allowed to expire, or, as they express it, to fall to the bank. The 5 per cent. which the bank gains, when deposits either of coin or bullion are allowed to fall to it, may be considered as the warehouse rent for the perpetual keeping of such deposits.

The sum of bank-money for which the receipts are expired must be very considerable. It must comprehend the whole original capital of the bank, which, it is generally supposed, has been allowed to remain there from the time it was first deposited, nobody caring either to renew his receipt or to take out his deposit, as, for the reasons already assigned, neither the one nor the other could be done without loss. But whatever may be the amount of this sum, the proportion which it bears to the whole mass of bank-money is supposed to be very small. The bank of Amsterdam has for these many years past been the great warehouse of Europe for bullion, for which the receipts are very seldom allowed to expire, or, as they express it, to fall to the bank. The far greater part of the bank-money, or of the credits upon the books of the bank, is supposed to have been created, for these many years past, by such deposits which the dealers in bullion are continually both making and withdrawing.

No demand can be made upon the bank but by means of a recipie or receipt. The smaller mass of bank-money, for which the receipts are expired, is mixed and confounded with the much greater mass for which they are still in force; so that, though there may be a considerable sum of bank-money for which there are no receipts, there is no specific sum or portion of it which may not at any time be demanded by one. The bank cannot be debtor to two persons for the same thing; and the owner of bank-money who has no receipt cannot demand payment of the bank till he buys one. In ordinary and quiet times, he can find no difficulty in getting one to buy at the market-price, which generally corresponds with the price at which he can fell the coin or bullion it entitles him to take out of the bank.

It might be otherwise during a public calamity; an invasion, for example, such as that of the French in 1672. The owners of bank-money being then all eager to draw it out of the bank, in order to have it in their own keeping, the demand for receipts might raise their price to an exorbitant height. The holders of them might form extravagant expectations, and instead of 2 or 3 per cent. demand half the bank-money for which credit had been given upon the deposits that the receipts had respectively been granted for. The enemy, informed of the constitution of the bank, might even buy them up in order to prevent the carrying away of the treasure. In such emergencies, the bank, it is supposed, would break through its ordinary rule of making payment only to the holders of receipts. The holders of receipts, who had no bank-money, must have received within 2 or 3 per cent. of the value of the deposit for which their respective receipts had been granted. The bank, therefore, it is said, would in this case make no scruple in paying, either with money or bullion, the full value of what the owners of bank-money who could get no receipts were credited for in its books; paying at the same time 2 or 3 per cent. to such holder of receipts as had no bank-money, that being the whole value which in this state of things could justly be supposed due to them.

Even in ordinary and quiet times it is the interest of the holders of receipts to depress the agio, in order either to buy bank-money (and consequently the bullion which their receipts would then enable them to take out of the bank) so much cheaper, or to sell their receipts to those who have bank-money, and who want to take out bullion, so much dearer; the price of a receipt being generally equal to the difference between the market-price of bank-money and that of the coin or bullion for which the receipt had been granted. It is the interest of the owners of bank-money, on the contrary, to raise the agio, in order either to sell their bank-money so much dearer, or to buy a receipt so much cheaper. To prevent the stock-jobbing tricks which these opposite interests might sometimes occasion, the bank has of late years come to a resolution to fell at all times bank-money for currency, at 5 per cent. agio, and to buy it again at 4 per cent. agio. In consequence of this resolution, the agio can never either rise above 5 or sink below 4 per cent. and the proportion between the market-price of the bank and that of current money is kept at all times very near to the proportion between their intrinsic values. Before this resolution was taken, the market-price of money used sometimes to rise so high as 9 per cent. agio, and sometimes to sink so low as par, according as opposite interests happened to influence the market.

The bank of Amsterdam professes to lend out no part of what is deposited with it, but, for every gilder for which it gives credit in its books, to keep in its repositories the value of a gilder either in money or bullion. That it keeps in its repositories all the money or bullion for which there are receipts in force, for which it is at all times liable to be called upon, and which, in reality, is continually going from it and returning to it again, cannot well be doubted. But whether it does so likewise with regard to that part of its capital for which the receipts are long ago expired, for which in ordinary and quiet times it cannot be called upon, and which in reality is very likely to remain with it for ever, or as long as the States of the United Provinces subsist, may appear perhaps more uncertain. At Amsterdam, however, no part of faith is better established, than that for every gilder circulated as bank-money, there is a correspondent gilder in gold and silver to be found in the treasure of the bank. The city is guarantee that it should be so. The bank is under the direction of the four reigning burgomasters, who are changed every year. Each new set of burgomasters visits the treasure, compares it with the books, receives it upon oath, and delivers it over, with the same awful solemnity, to the set which succeeds it; and in that sober and religious country oaths are not yet disregarded. A rotation of this kind seems alone a sufficient security against any practices which cannot be avowed. Amidst all the revolutions which faction has ever occasioned in the government of Amsterdam, the prevailing party has at no time accused their predecessors of infidelity in the administration of the bank. No accusation could have affected more deeply the reputation and fortune of the disgraced party; and if such an accusation could have been supported, we may be assured that it would have been brought. In 1672, when the French king was at Utrecht, the bank of Amsterdam paid so readily as left no doubt of the fidelity with which it had observed its engagements. Some of the pieces which were then brought from its repositories appeared to have been scorched with the fire which happened in the town-house soon after the bank was established. Those pieces, therefore, must have lain there from that time.

What may be the amount of the treasure in the bank is a question which has long employed the speculations of the curious. Nothing but conjecture can be offered concerning it. It is generally reckoned, that there are about 2000 people who keep accounts with the bank; and allowing them to have, one with another, the value of 1500l. lying upon their respective accounts (a very large allowance), the whole quantity of bank-money, and consequently of treasure in the bank, will amount to 3,000,000l. or, at 11 gilders the pound sterling, 33,000,000 of gilders; a great sum, and sufficient to carry on a very extensive circulation, but vastly below the extravagant ideas which some people have formed of this treasure.

The city of Amsterdam derives a considerable revenue from the bank. Besides what may be called the warehouse-rent above-mentioned, each person, upon first opening an account with the bank, pays a fee of 10 gilders; and for every new account, 3 gilders 3 florins; for every transfer, 2 florins; and if the transfer is for less than 300 gilders, 6 florins; in order to discourage the multiplicity of small transactions. The person who neglects to balance his accounts twice in the year forfeits 25 gilders. The person who orders a transfer for more than is upon his accounts, is obliged to pay 3 per cent. for the sum overdrawn, and his order is set aside into the bargain. The bank is supposed, too, to make a considerable profit by the sale of the foreign coin or bullion which sometimes falls to it by the expiring of receipts, and which is always kept till it can be sold with advantage. It makes a profit likewise by selling bank-money at 5 per cent. agio, and buying it in at 4. These different emoluments amount to a good deal more than what is necessary for paying the salaries of officers, and defraying the expense of management. What is paid for the keeping of bullion upon receipts, is alone supposed to amount to a neat annual revenue of between 150,000 and 200,000 gilders. Public utility, however, and not revenue, was the original object of this institution. Its object was to relieve the merchants from the inconvenience of a disadvantageous exchange. The revenue which has arisen from it was unforeseen, and may be considered as accidental.

sea affairs, denotes an elevation of the ground or bottom of the sea, so as sometimes to surmount the surface of the water, or at least to leave the water so shallow as usually not to allow a vessel to remain afloat over it.—In this sense, bank amounts to much the same as flat, shoal, &c. There are banks of sand, and others of stone, called also shelues, or rocks. In the North sea they also speak of banks of ice, which are large pieces of that matter floating.