Page:The American Cyclopædia (1879) Volume II.djvu/294

 271 BANK 1778 was estimated by Mr. Hope at 33,000,000 florins. The bank of Hamburg was established in the year 1619. This institution is a bank of deposit and circulation, which circulation is based upon fine silver in bars. The stock of the bank arises out of the deposits, which are confined solely to silver. The bank of Ham- burg differs essentially from any other banking institution in the world. The difference at which it receives and pays out the silver de- posits, about one half of 1 per cent., constitutes the charge of the bank for custody of the funds intrusted to it. Although in some respects it has undergone changes in its management since it was instituted, still the plan is essentially the same as it was in 1710. It has been felt, as well by the mercantile community of Hamburg as by those directly interested in the bank, that changes are necessary to conform to the present state of business. It is deemed de- sirable that the bank should be enabled to make better use of its surplus capital, which owing to restrictions is almost valueless. Its deposits, Oct. 10, 1872, were 30,766,666 thalers. The bank of Rotterdam was established in 1635 ; the bank of Stockholm in 1G88. British Bankt. The bank of England was established in 1694, William and Mary then being on the throne. To the war with France, and the ex- treme difficulty experienced by the government in raising funds for conducting that war, is the institution of this monopoly due. The idea originated with William Paterson, a mer- chant of London, who readily saw that the government, which had been paying interest at the rate of from 20 to 40 per cent, per an- num, would without much hesitation grant ex- clusive and almost unlimited privileges to such parties as would in turn furnish it with a fixed and permanent loan, at a reasonable rate of in- terest. The plan, being brought to the atten- tion of the king, was submitted to the privy council, when the details were completed, and it was laid before parliament. There, how- ever, it met with the violent opposition of a formidable party. Nevertheless, the bill was carried by the government, and on April 25, 1694, became a law. It was provided that the capital, 1,200,000, should be permanently lent to the government at 8 per cent, per annum, and that in addition to the interest an allow- ance of 4,000 per annum should be made by the government for the management of the debt. So popular was the scheme, and so great was the desire of the public to become proprie- tors of the bank, that within ten days after the books were opened the entire capital was sub- scribed. The corporate title under which this institution commenced operations, and has continued to the present day, is "The Gov- ernor and Company of the Bank of England." The bank was opened for business on Jan. 1, 1695, the stockholders having previously elect- ed a governor, a deputy governor, and a board of 24 directors. Those several parties were required by law to hold stock as follows : gov- ernor 4,000, deputy governor 3,000, and di- rector 2,000. The charter was granted for eleven years, and the officers were required to be elected annually between March 25 and April 25, after the year 1696. The bank im- mediately issued notes, none of which were, however, of a smaller denomination than 20 sterling, and commenced discounting bills of exchange at rates varying from 3 to 6 per cent., distinction being made in favor of persons who used the bank as a place of deposit. Within two years the institution experienced consider- able trouble, under the influence of which its notes fell as low as 20 per cent, below par. Although notes to the amount of 480,000 were redeemed, it was found necessary in 1C97 to increase the capital 1,000,000 sterling. This increase had the effect within a few months of causing the stock not only to re- cover a discount of from 40 to 50 per cent., but to sell at a premium of 12 per cent. Since first this institution was founded, its capital and the loan to the government have been nearly identical in amount. In 1833, how- ever, the debt to the bank was reduced about 3,500,000. The following table gives the capital of the bank at various periods, and also the dates of the several renewals of the charter, with the amount of government debt at each period : Dates. Capital. 1694 1,200.000 1697 2,201,171 1708 4,402,843 1709 5,058,547 1710 5.559,996 1722 8,959,996 1742 9,800,000 1746 10,780,000 1782... 11,642,400 1816 14,558,000 Dates of Government renewal. debt. 1694 1.800,000 1697 1.200,000 1708 8.875.02T 1718 8,875,027 1742 10,700,000 1764 11,6S6.SOO 1781 11,666.800 1800 11,686,800 1888 11,015,100 1844 11,015,100 The management of the entire public debt of Great Britain is placed in the hands of the bank of England, for which service it has received compensation, which has from time to time varied in amount according to circumstances. During the year 1845 this compensation was 93,111 19s. lOd. In addition to the perma- nent debt of the government to the bank, the latter contracted with the former on March 20, 1823, to pay at stated intervals between 1823 and 1828 certain pensions and annuities arising out of the then recent wars, amounting to 13,- 089,419. This is termed the " dead weight." In consideration of this the bank was to re- ceive from the government an annuity of 585,740 for 44 years. On Feb. 26, 1797, an order was issued by the privy council to the bank restraining it from the further payment of specie. On the following day the officers of the bank issued a notice, in which they stated that in consequence of the foregoing order they " think it is their duty to inform the proprie- tors of the bank stock as well as the public at large, that the general concerns of the bank are in the most affluent and flourishing situa- tion, and such as to preclude every doubt as to