BANK. 



231 



Bank of 



Barcelona. 

 V. 1). 1401. 



Bank. all payments of wholesale merchandise and bills of 

 \ -^ exchange must be made in banco, or bank-notes ; 

 and all debtors must lodge their money in the bank, 

 that their creditors may receive payment in banco, 

 which is done, ..y transferring the amount from the 

 name of the one to that of the other, or by writing 

 off the sum from the account of the debtor, and 

 placing it to that of the creditor. Payments are 

 made in this manner, without the intervention of 

 gold or silver ; but there are exceptions to this rule, 

 in cases of retail trade, or when foreigners wish to 

 carry off the precious metals. All the riches of the 

 State thus flowed into the bank, and through various 

 channels were again diffused among traders, to give 

 activity to the extensive commerce of this opulent 

 and once powerful city. From its good faith, and 

 the regularity of its transactions, the Bank of Venice 

 has always maintained a high character in Europe ; 

 and, on some occasions, its obligations have been 

 more esteemed than the bonds of kings. 



During two centuries and a half, the Bank of Ve- 

 nice was unrivalled ; for, so gradual is the progress 

 of improvement, that human knowledge is only ma- 

 tured by the experience of ages ; and it was not un- 

 til the year 1-K)1, that the magistrates of Barcelona 

 established a bank in that city. It was called the 

 " Table of Exchange," [Tarda de Cambi,) and was 

 properly a bank of exchange and deposit. Foreign 

 bilis were negotiated with the same liberality as those 

 of the citizens ; and accommodations were extended 

 to strangers as well as to natives. It was altogether 

 calculated for the encouragement of both internal 

 and external commerce ; and the funds of the city 

 were pledged as security for the responsibility of the 

 bank. 



In the year 1407, the Bank of Genoa commenced; 

 but previous to this tune, the republic borrowed 

 A. i). 1407. large sums of money from the citizens, assigning 

 certain branches of the revenue for the payment of 

 the interest ; and a Board of Management, composed 

 of the most respectable citizens, was appointed to 

 conduit the loans, pay the interest, and account to 

 government for the funds entrusted to its care. 

 From this circumstance, the Genoese claim the merit 

 of establishing a bank as early as the Venetians ; but 

 it is evident, that the transactions of this Board were 

 only an approximation to banking. In process of 

 time, however, the multiplicity and extent of these 

 funds induced disorder and confusion, and it was deem- 

 ed expedient to consolidate the whole into one capi- 

 tal stock, to be managed by a bank called " The 

 CHAMBER OF St GzorGB," to be governed by eight 

 protectors, annually elected by the creditors and 

 stockholders. Under this form of government, the 

 affairs of the bank were prosperously conducted ; 

 but the farther increase of the public debts ; the ac- 

 cession of towns and territories, among which was 

 the little kingdom of Corsica, made the business o{ 

 the bank greatly more complex ; and the inconve- 

 nience of annual successions of new protectors be- 

 coming apparent, determined the Genoese, in the 

 year 1 Hi, to elect eight new governors for the ma- 

 nagement of the bank, of whom only two were to 

 go out every year. 



Before the discovery of a passage to the Indies, by 



Bank of 

 ticnoa. 



the Cape of Good Hope, the Venetians enjoyed a Bank, 

 monopoly of the lucrative trade of the East, by v - v-~-' 

 means of the Mammetucks of Egypt, with whom 

 they were leagued by policy and interest, which dif- 

 fused opulence and wealth throughout Italy. This 

 extensive commerce created and gave circulation to 

 bills of exchange, the credit and currency of which 

 were universally acknowledged when they bore the 

 signature of the Banks of Italy; and for several cen- 

 turies there were no other establishments of the kind 

 in Europe. 



The Bank of Amsterdam was established on the Bank of 

 31st January 1609. The magistrates of the city, Amster- 

 under authority of the States, declared themselves dam. 

 the perpetual cashiers of the inhabitants, and that all lfi09 - 



payments, above 600 guilders, (but afterwards re- 

 duced to 300,) and bills of exchange, shall be made 

 in the bank, which obliged merchants to open ac- 

 counts with it for the payment of their foreign bills. 

 The extensive commerce of Amsterdam involved such 

 a variety of transactions, that the expediency of re- 

 gulating them became evident ; and no measure could 

 more effectually secure property, check law suits, 

 and prevent frauds, than the establishment of a bank- 

 office, in which all receipts and payments were re- 

 gistered in books kept open for the purpose. Dr 

 Smith ascribes the origin of this bank to the debased 

 state of the current coin of Holland, which the trade 

 of Amsterdam brought from all quarters of Europe ; 

 and which was sold at a reduction of nine per cent, 

 below the money of the mint. Merchants, in such 

 circumstances, could not always find standard money 

 to pay bills of exchange, the value of which was un- 

 certain, and accordingly operated against the trade 

 of the United Provinces with foreign nations. But 

 as the bank received the light or worn coin at 

 its real intrinsic value in the good money of the 

 country, and gave credit for the amount in its books, 

 an invariable standard was thus established that tend- 

 ed greatly to simplify and facilitate the operations of 

 commerce. 



The beneficial effects of this establishment in Hol- 

 land were soon perceived ; and bank-money imme- 

 diately bore a premium, or agio, which is a term 

 to denote the difference of price between the money 

 of the bank and the coin of the country. When we 

 consider that coin is only a representative of commo- 

 dities, and that its utility arises solely from its being 

 a generally acknowledged standard of value, by 

 which mankind, in the civilised state of society, are 

 enabled to calculate the price of articles of exchange, 

 it is not surprising, that bank-receipts, which repre- 

 sent property also, and, at the same time, are not 

 liable to risk, danger, or deterioration of any kind, 

 should be held in higher estimation than coin, which 

 is exposed to robbery and all sorts of casualties. In 

 all countries, where banks have been regular in their 

 transactions, and their responsibility undoubted, their 

 paper has carried a premium, more or less, accord- 

 ing to circumstances ; and the agio of Amsterdam 

 was generally about live per cent. 



The amount of the capital of the Bank of Amster- 

 dam was never exactly ascertained. It was original- 

 ly constituted by deposits of coin ; and there was full 

 value in its coffers for all the credits and receipts it 



