Of the different Measurs have been used to Preserve and Increase Money. And of Banks.
The Measures have been used to preserve and Increase Money, have in some Countries been opposite to what has been used in others: And opposite Measures have been us'd in the same Countries, without any differing Circumstances to occasion them.
Some Countries have rais'd Money in the Denomination, when others have lower'd it; Some have allay'd it, when others who had allay'd it have rectified it; Some have prohibit the Export of Money under the severest Penalties, when others have by Law allowed it to be exported;Some thinking to add to the Money, have obliged Traders to bring home Bullion, in proportion to the Goods they imported. Most Countries have try'd some or all of these Measures, and others of the same Nature, and have tryed contrary Measures at one time, from what they us'd immediatly before, from the Opinion, that since the Method used had not the effect design'd, a contrary would: Yet is has not been found, that any of them have preserv'd or increased Money; but on the contrair.
The use of Banks has been the best Method yet practis'd for the increase of Money. Banks have been long us'd in Italy, but as I'm inform'd the Invention of them was owing to Sweedland. Their Money was Copper, which was inconvient, by reason of its Weight and Bulk; to remedy this Inconveniency, a Bank was set up where the Money might be pledg'd, and Credit given to the Value, which past in Payments, and facilitat Trade.
The Dutch for the same reason set up the Bank of Amsterdam. Their Money was Silver, but their Trade was so great as to find payments even in Silver inconvenient. This Bank like that of Sweedland, is a secure Place, where Merchants may give in Money, and have credit to trade with. Besides the convenience of easier and quicker Payments, these Banks saves the Expense of Casheers, the Expense of Bags and Carriage, losses by bad money, and the Money is safer than in the Merchants Houses, for 'tis less lyable to Fire or Robbery, the necessary Measures being taken to prevent them.
Merchants who have Money in the Bank of Amsterdam, and People of other Countries who deal with them, are not lyable to the Changes in the Money, by its being allay'd or alter'd in the Denomination: for, the Bank receives no Money but what's of Value, and is therefore call'd Bank-money; and tho rais'd in current payments, it goes for the Value it was pledg'd for in Bank-payments. The Agio of the Bank changes a Quarter or a half per cent as current Money is more or less scarce.
Banks where the Money is pledg'd equal to the Credit given, are sure; For, thos Demands are made of the whole, the Bank does not fail in payment.
By the Constitution of this Bank, the whole sum for which Credit is given, ought to remain there, to be ready at demand; Yet a sum is lent by the Managers for a Stock to the Lumbar, and 'tis thought they lend great Sums on other occasions. So far as they lend they add to the Money, which brings a Profit to the Country, by imploying more People, and extending Trade; They add to the Money to be lent, whereby it is easier borrowed, and at less use; and the Bank has a benefit:
But the Bank is less sure, and tho none suffer by it, or are apprehensive of Danger, its Credit being good; Yet if the whole Demands were made, or Demands greater than the remaining Money, there could not all be satisfied, till the Bank had called in what Sums were lent.
The certain good it does, will more than ballance the hazard, tho once in two or three years it failed in payment; providing the Sums lend be well secured: Merchants who had Money there, might be disapointed of it at demand, but the Security being good, and Interest allowed; Money would be had on a small Discompt, perhaps at the Par.
Last War, England set up a Bank to have the Conveniencies of that at Amsterdam, and by their Constitution to encrease Money. This Bank was made up of Subscribers, who lent the King 1200000 lib. at 8 and a third per cent for 11 years, on a Parliamentary Fund; And were priviledg'd Bankers for that time. The sum due by the Government was a Security to the People, to make good any Losses the Bank might suffer.
This Bank was safer than the Goldsmiths Notes in use before. It made a great Addition to the Money, having a much greater Sum of Notes out, than Money in Bank. And the Sum lent the King, which was the Fund belong'd to the Subscribers, was negotiat at Profit, and had the same Effect in Trade as Money. I don't know how their Notes came to be at discount, whether from the Circumstances of the Nation, or from ill Management.
The Fund of the Bank of Scotland was a 100000 l. of which a Tenth was pay'd in. This Bank was safer than that of England, there being a Register whereby most Sums lent were secured. Its Notes went for 4 or 5 times the value of the Money in Bank, and by so much as these Notes went for more than the Money in Bank; So much was added to the Money of the Nation.
This Bank was more useful than that of Amsterdam, or England; Its Notes passing in most payments, and through the whole Country: The Bank of Amsterdam being only for that Town, and that of England of little use but at London.
