hundred thousand pounds； or for L96；000 a year interest； at the
rate of eight per cent； and L4000 a year for the expense of
management。 The credit of the new government； established by the
Revolution； we may believe； must have been very low； when it was
obliged to borrow at so high an interest。
In 1697 the bank was allowed to enlarge its capital stock by
an engraftment of L1；001；171 10s。 Its whole capital stock
therefore； amounted at this time to L2；201；171 10s。 This
engraftment is said to have been for the support of public
credit。 In 1696； tallies had been at forty； and fifty； and sixty
per cent discount； and bank notes at twenty per cent。 During the
great recoinage of the silver； which was going on at this time；
the bank had thought proper to discontinue the payment of its
notes； which necessarily occasioned their discredit。
In pursuance of the 7th Anne； c。 7； the bank advanced and
paid into the exchequer the sum of L400；000； making in all the
sum of L1；600；000 which it had advanced upon its original annuity
of L96；000 interest and L4000 for expense of management。 In 1708；
therefore； the credit of government was as good as that of
private persons； since it could borrow at six per cent interest
the common legal and market rate of those times。 In pursuance of
the same act； the bank cancelled exchequer bills to the amount of
L1；775；027 17s。 10 1/2d。 at six per cent interest； and was at the
same time allowed to take in subscriptions for doubling its
capital。 In 1708； therefore； the capital of the bank amounted to
L4；402；343； and it had advanced to government the sum of
L3；375；027 17s。 10 1/2d。
By a call of fifteen per cent in 1709； there was paid in and
made stock L656；204 Is。 9d。； and by another of ten per cent in
1710； L501；448 12s。 11d。 In consequence of those two calls；
therefore； the bank capital amounted to L5；559；995 14s。 8d。
In pursuance of the 3rd George I； c。 8； the bank delivered
up two millions of exchequer bills to be cancelled。 It had at
this time； therefore； advanced to government 17s。 10d。 In
pursuance of the 8th George 1； c。 21； the bank purchased of the
South Sea Company stock to the amount of 14；000；000； and in 1722；
in consequence of the subscriptions which it had taken in for
enabling it to make this purchase； its capital stock was
increased by L3；400；000。 At this time； therefore； the bank had
advanced to the public L9；375；027 17s。 10 1/2d。； and its capital
stock amounted only to L8；959；995 14s。 8d。 It was upon this
occasion that the sum which the bank had advanced to the public；
and for which it received interest； began first to exceed its
capital stock； or the sum for which it paid a dividend to the
proprietors of bank stock； or； in other words； that the bank
began to have an undivided capital； over and above its divided
one。 It has continued to have an undivided capital of the same
kind ever since。 In 1746； the bank had； upon different occasions；
advanced to the public L11；686；800 and its divided capital had
been raised by different calls and subscriptions to L10；780；000。
The state of those two sums has continued to be the same ever
since。 In pursuance of the 4th of George III； c。 25； the bank
agreed to pay to government for the renewal of its charter
L110；000 without interest or repayment。 This sum； therefore； did
not increase either of those two other sums。
The dividend of the bank has varied according to the
variations in the rate of the interest which it has； at different
times； received for the money it had advanced to the public； as
well as according to other circumstances。 This rate of interest
has gradually been reduced from eight to three per cent。 For some
years past the bank dividend has been at five and a half per
cent。
The stability of the Bank of England is equal to that of the
British government。 All that it has advanced to the public must
be lost before its creditors can sustain any loss。 No other
banking company in England can be established by act of
Parliament； or can consist of more than six members。 It acts； not
only as an ordinary bank； but as a great engine of state。 It
receives and pays the greater part of the annuities which are due
to the creditors of the public； it circulates exchequer bills；
and it advances to government the annual amount of the land and
malt taxes； which are frequently not paid up till some years
thereafter。 In those different operations； its duty to the public
may sometimes have obliged it； without any fault of its
directors； to overstock the circulation with paper money。 It
likewise discounts merchants' bills； and has； upon several
different occasions； supported the credit of the principal
houses； not only of England； but of Hamburg and Holland。 Upon one
occasion； in 1763； it is said to have advanced for this purpose；
in one week； about L1；600；000； a great part of it in bullion。 I
do not； however； pretend to warrant either the greatness of the
sum； or the shortness of the time。 Upon other occasions； this
great company has been reduced to the necessity of paying in
sixpences。
It is not by augmenting the capital of the country； but by
rendering a greater part of that capital active and productive
than would otherwise be so； that the most judicious operations of
banking can increase the industry of the country。 That part of
his capital which a dealer is obliged to keep by him unemployed；
and in ready money； for answering occasional demands； is so much
dead stock； which； so long as it remains in this situation；
produces nothing either to him or to his country。 The judicious
operations of banking enable him to convert this dead stock into
active and productive stock； into materials to work upon； into
tools to work with； and into provisions and subsistence to work
for； into stock which produces something both to himself and to
his country。 The gold and silver money which circulates in any
country； and by means of which the produce of its land and labour
is annually circulated and distributed to the proper consumers；
is； in the same manner as the ready money of the dealer； all dead
stock。 It is a very valuable part of the capital of the country；
which produces nothing to the country。 The judicious operations
of banking； by substituting paper in the room of a great part of
this gold and silver； enables the country to convert a great part
of this dead stock into active and productive stock； into stock
which produces something to the country。 The gold and silver
money which circulates in any country may very properly be
compared to a highway； which； while it circulates and carries to
market all the grass and corn of the country； produces itself not
a single pile of either。 The judicious operations of banking； by
providing； if I may be allowed so violent a metaphor； a sort of
waggon…way through the air； enable the country to convert； as it
were； a great part of its highways into good pastures and
corn…fields； and thereby to increase very considerably the annual
produce of its land and labour。 The commerce and industry of the
country； however； it must be acknowledged； though they may be
somewhat augmented； cannot be altogether so secure when they are
thus； as it were； suspended upon the Daedalian wings of paper
money as when they travel about upon the solid ground of gold and
silver。 Over and above the accidents to which they are exposed
from the unskillfulness of the conductors of this paper money；
they are liable to several others； from which no prudence or
skill of those conductors can guard them。
An unsuccessful war； for example； in which the enemy got
possession of the capital； and consequently of that treasure
which supported the credit of the paper money； would occasion a
much greater confusion in a country where the whole circulation
was carried on by paper； than in one where the greater part of it
was carried on by gold and silver。 The usual instrument of
commerce having lost its value； no exchanges could be made but
either by barter or upon credit。 All taxes having been usually
paid in paper money； the prince would not have wherewithal either
to pay his troops； or to furnish his magazines； and the state of
the country would be much more irretrievable than if the greater
part of its circulation had consisted in gold and silver。 A
prince； anxious to maintain his dominions at all times in the
state in which he can most easily defend them； ought； upon this
account； to guard； not only against that excessive multiplication
of paper money which ruins the very banks which issue it； but
even against that multiplication of it which enables them to fill
the greater part of the circulation of the country with it。
The circulation of every country may be considered as
divided into two different branches： the circulation of the
dealers with one another； and the circulation between the dealers
and the consumers。 Though the same pieces of money； whether paper
or metal； may be employed sometimes in the one circulation and
sometimes in the other； yet as both