THE English Jews, that eminently commercial race, were, as we have shown in our chapter on Old Jewry, our first bankers and usurers. To them, in immediate succession, followed the enterprising Lombards, a term including the merchants and goldsmiths of Genoa, Florence, and Venice. Utterly blind to all sense of true liberty and justice, the strong-handed king seems to have resolved to squeeze and crush them, as he had squeezed and crushed their unfortunate predecessors. They were rich and they were strangers -that was enough for a king who wanted money badly. At one fell swoop Edward III. seized the Lombards' property and estates. Their debtors naturally approved of the king's summary measure. But the Lombards grew and flourished, like the trampled camomile, and in the fifteenth century advanced a loan to the state on the security of the Customs. The Steelyard merchants also advanced loans to our kings, and were always found to be available for national emergencies, and so were the Merchants of the Staple, the Mercers' Company, the Merchant Adventurers, and the traders of Flanders.

Up to a late period in the reign of Charles I. the London merchants seem to have deposited their surplus cash in the Mint, the business of which was carried on in the Tower. But when Charles I., in an agony of impecuniosity, seized like a robber the £200,000 there deposited, calling it a loan, the London goldsmiths, who ever since 1386 had been always more or less bankers, now monopolised the whole banking business. Some merchants, distrustful of the goldsmiths in these stormy times, entrusted their money to their clerks and apprentices, who too often cried, "Boot, saddle and horse, and away!" and at once started with their spoil to join Rupert and his pillaging Cavaliers. About 1645 the citizens returned almost entirely to the goldsmiths, who now gave interest for money placed in their care, bought coins, and sold plate. The Company was not particular. The Parliament, out of plate and old coin, had coined gold, and seven millions of half-crowns. The goldsmiths culled out the heavier pieces, melted them down,

and exported them. The merchants' clerks, to whom their masters' ready cash was still sometimes entrusted, actually had frequently the brazen impudence to lend money to the goldsmiths, at fourpence per cent. per diem; so that the merchants were often actually lent their own money, and had to pay for the use of it. The goldsmiths also began now to receive rent and allow interest for it. They gave receipts for the sums they received, and these receipts were to all intents and purposes marketable as bank-notes.

Grown rich by these means, the goldsmiths were often able to help Cromwell with money in advance on the revenues, a patriotic act for which we may be sure they took good care not to suffer. When the great national disgrace occurred-the Dutch sailed up the Medway and burned some of our ships-there was a run upon the goldsmiths, but they stood firm, and met all demands. The infamous seizure by Charles II. of £1,300,000, deposited by the London goldsmiths in the Exchequer, all but ruined these too confiding men, but clamour and pressure compelled the royal embezzler to at last pay six per cent. on the sum appropriated. In the last year of William's reign, interest was granted on the whole sum at three per cent., and the debt still remains undischarged. At last a Bank of England, which had been talked about and wished for by commercial men ever since the year 1678, was actually started, and came into operation.

That great financial genius, William Paterson, the founder of the Bank of England, was born in 1658, of a good family, at Lochnaber, in Dumfriesshire. He is supposed, in early life, to have preached among the persecuted Covenanters. He lived a good deal in Holland, and is believed to have been a wealthy merchant in New Providence (the Bahamas), and seems to have shared in Sir William Phipps' successful undertaking of raising a Spanish galleon with £300,000 worth of sunken treasure. It is absurdly stated that he was at one time a buccaneer, and so gained a knowledge of Darien and the ports of the Spanish main. That he knew and obtained information from Captains

Bank of England.]

saw Public Credit on her throne in Grocers' Hall, the Great Charter over her head, the Act of Settlement full in her view. Her touch turned everything to gold. Behind her seat bags filled with 'coin were piled up to the ceiling. On her right and on her left the floor was hidden by pyramids of guineas. On a sudden the door flies open, the Pretender rushes in, a sponge in one hand, in the other a sword, which he shakes at the Act of Settlement. The beautiful Queen sinks down fainting; the spell by which she has turned all things around her into treasure is broken; the money-bags shrink like pricked bladders; the piles of gold pieces are turned into bundles of rags, or fagots of wooden tallies."

In 1696 (very soon after its birth) the Bank experienced a crisis. There was a want of money in England. The clipped silver had been called in, and the new money was not ready. Even rich people were living on credit, and issued promissory notes. The stock of the Bank of England had gone rapidly down from 110 to 83. The goldsmiths, who detested the corporation that had broken in on their system of private banking, now tried to destroy the new company. They plotted, and on the same day they crowded to Grocers' Hall, where the Bank was located from 1694 to 1734, and insisted on immediate payment-one goldsmith alone demanding £30,000. The directors paid all their honest creditors, but refused to cash the goldsmiths' notes, and left them their remedy in Westminster Hall. The goldsmiths triumphed in scurrilous pasquinades entitled, "The Last Will and Testament," "The Epitaph," "The Inquest on the Bank of England." The directors, finding it impossible to procure silver enough to pay every claim, had recourse to an expedient. They made a call of 20 per cent. on the proprietors, and thus raised a sum enabling them to pay every applicant 15 per cent. in milled money on what was due to him, and they returned him his note, after making a minute upon it that part had been paid. A few notes thus marked, says Macaulay, are still preserved among the archives of the Bank, as memorials of that terrible year. The alternations were frightful. The discount, at one time 6 per cent., was presently 24. A £10 note, taken for more than £9 in the morning, was before night worth less than £8.

Paterson attributes this danger of the Bank to bad and partial payments, the giving and allowing exorbitant interest, high premiums and discounts, contracting dear and bad bargains; the general debasing and corrupting of coin, and such like, by which means things were brought to such a pass

455

that even 8 per cent. interest on the land-tax, although payable within the year, would not answer. Guineas, he says, on a sudden rose to 30s. per piece, or more; all currency of other money was stopped, hardly any had wherewith to pay; public securities sank to about a moiety of their original values, and buyers were hard to be found even at those prices. No man knew what he was worth; the course of trade and correspondence almost universally stopped; the poorer sort of people were plunged into irrepressible distress, and as it were left perishing, whilst even the richer had hardly wherewith to go to market for obtaining the common conveniences of life.

The King, in Flanders, was in great want of money. The Land Bank could not do much. The Bank, at last, generously offered to advance £200,000 in gold and silver to meet the King's necessities. Sir Isaac Newton, the new Master of the Mint, hastened on the re-coinage. Several of the ministers, immediately after the Bank meeting (over which Sir John Houblon presided), purchased stock, as a proof of their gratitude to the body which had rendered so great a service to the State.

The diminution of the old hammered money continued to increase, and public credit began to be put to a stand. The opposers of Paterson wished to alter the denomination of the money, so that 9d. of silver should pass for 1s., but at last agreed to let sterling silver pass at 5s. 2d. an ounce, being the equivalent of the milled money. The loss of the re-coinage to the nation was about £3,000,000. Paterson, who was one of the first Directors of the Bank of England, upon a qualification of £2,000 stock, disagreed with his colleagues on the question of the Bank's legitimate operations, and sold out in 1695. In 1701, Paterson says, after the peace of Ryswick, he had an audience of King William, and drew his attention to the importance of three great measures

the union with Scotland, the seizing the principal Spanish ports in the West Indies, and the holding a commission of inquiry into the conduct. of those who had mismanaged the King's affairs during his absence in Flanders. Paterson died in 1719, on the eve of the fatal South Sea Bubble.

When the notes of the Bank were at 20 per cent. discount, the Government (says Francis) empowered the corporation to add £1,001,171 10s. to their original stock, and public faith was restored by four-fifths of the subscriptions being received in tallies and orders, and one-fifth in bank-notes at their full value, although both were at a heavy discount in the market.

The past services of the Bank were not for

should be divided among the new members; that the Bank might circulate additional notes to the amount subscribed, provided they were payable on demand, and in default they were to be paid by the Exchequer out of the first money due to the Bank; that no other bank should be allowed by Act of Parliament during the continuance of the Bank of England; that it should be exempt from all tax or imposition; and that no contract made for any Bank stock to be bought or sold should be valid unless registered in the Bank books, and transferred within fourteen days. It was also enacted that not above two-thirds of the directors should be re-elected in the succeeding year. These vigorous_measures were thoroughly successful.

stock, given to the proprietors in exchange for tallies at 50 per cent. discount, rose to 112. The Bank had lowered the interest of money. As early as 1697 it had proposed to have branch Banks in every city and market town of England.

In 1700-1704, the conquests of Louis XIV. alarmed England, and shook the credit of the Bank. In the latter year the Bank Directors were once more obliged to issue sealed bills bearing interest for a large sum, in order to keep up their credit. In 1707 the fears of an invasion threatened by the "Pretender" brought down stocks 14 or 15 per cent. The goldsmiths then gathered up Bank bills, and tried to press the Directors. Hoare and Child both joined in the attack, and the latter pre