Page:The Bank of England and the State, 1905.djvu/15

 Securities, or in any other manner whatever, without the express and distinct authority of Parliament: and the Act 57 George III, c. 48, regulates the mode by which quarterly advances may be made on deficiency bills. These regulations have put it out of the power of the Government to obtain pecuniary accommodation from the Bank of an irregular character, and the abrogation of the exclusive privileges of the Bank has put an end to all motive on the part of that body to make undue concessions to Government. The relations between the Government and the Bank in regard to the management of the funds at the disposal of the latter body, must now be regulated by mutual consideration of the general interests of the community, and are so amenable to public control as to render irregular, or even questionable, proceedings practically impossible."

These words describe sufficiently what the relations of the Government and the Bank were until a comparatively recent period. The foundation of the Bank itself and the causes which led up to it form an extremely attractive chapter of history, both as regards the commercial development of the nation, the foundations for the greatness of which may be said to have been laid during the seventeenth century, and as regards questions of currency and banking. The business of banking had, up to that time, as you are aware, been almost exclusively in the hands of the Goldsmiths, who had developed it to a remarkable degree, and whose liabilities at times assumed proportions which, even according to modern ideas, are very considerable: but, into that part of the question, interesting as it is, especially as regarding their relations with the Stuart Sovereigns, we must not enter to-night.

For some years before 1694 various schemes for the formation of a bank had been in the air, chiefly stimulated by the success of the Bank of Amsterdam, the operations of which had, it was assumed, largely contributed to the lower value of money obtaining in Holland, to the great advantage of Dutch commerce. Finally, in 1694, the efforts of William Paterson were successful, and the Charter for the new bank was granted. The far-sightedness