money; an extraordinary fallacy, when it is considered that the interest itself is payable in money. It is now however admitted, by all those who have studied the subject, that the rate of interest is in the long-run ruled by the average rate of profit derivable from the employment of capital. Of this a striking proof is afforded by the case of Australia, and still more by that of California, where, although, in consequence of their gold mines, that metal was peculiarly abundant, the rate of interest has been extremely high. The high rates which prevailed so generally in ancient times were to a great extent due to the uncertainty of repayment, both from the unsettled state of politics and from the uncertainty of the laws. I trust I may put in a word for ancient bankers, by pointing out that the high rates which they charged were not due to their covetousness, but to this insecurity of repayment. Instead, however, of endeavoring to cure the evil by removing the cause, legislators attempted to put down high rates of interest by rendering them. illegal. In this they were not only not successful, but they produced the very opposite effect from that which they intended. Thus in France the legal rate, which had been 5 per cent, was lowered in 1766 to 4 per cent, but the result was to raise, not to lower, the real rate, because the borrower had not only to pay interest, but to compensate the lender for the additional risk.

Again, in Mohammedan countries, notwithstanding that interest is expressly forbidden in the Koran-or rather perhaps to a certain extent in consequence of that prohibition-the ordinary rate is three or four times as high as in Europe. In England, after the Conquest, as in most other Christian countries at that time, interest was expressly prohibited, both by civil and ecclesiastical law; while, as the Jews were allowed under the Mosaic dispensation to charge interest to strangers, the business of moneylending fell naturally into their hands. Subsequently a similar privilege was accorded to the Italian or Lombard merchants from whom of course Lombard Street, still the centre of banking, derives its name.

In the reign of Henry the Eighth a statute was passed legalizing interest to

The

the extent of 10 per cent, under James the First it was lowered to 8 per cent, under the Republic to 6 per cent, and in the time of Queen Anne to 5 per cent, and the usury laws were not altogether abolished till 1839. As regards Scotland, interest was altogether illegal until the Reformation. In 1587 it was legalized up to 10 per cent. This Act was repealed in 1552, but revived in 1571, the effect of rendering interest once more il legal having been to raise it from 10 to 14 per cent. Subsequently, in 1633, the legal rate was reduced to 8 per cent, and in 1661 to 6 per cent. In Ireland interest was forbidden until 1635, when it was legalized up to 10 per cent, reduced in 1704 to 8 per cent, in 1722 to 7 per cent, and in 1732 to 6 per cent. statute of Anne, above alluded to, applied to the whole kingdom. In 1818 a Committee of the House of Commons was appointed, which reported strongly against the usury laws, but even then so strong was the popular prejudice that not until 1839 was it rendered legal to charge a higher rate of discount than 5 per cent. According to the Code Napoléon, 6 per cent was the highest legal rate on commercial loans, and 5 per cent on those on real property. In the United States, . again, the rate is fixed by law, and varies in the different States, being, for instance, 8 per cent in Alabama and Texas; 7 per cent in New York, South Carolina, Georgia, Michigan, and Wisconsin; 5 per cent in Louisiana; and 6 per cent in most of the other States. It is unnecessary to say that these restrictions are quite inoperative. It is very remarkable that so many civilized countries still fail to appreciate the simple statement of Locke, that "it is in vain to go about effectually to reduce the price of interest by a law; and you may as rationally hope to get a fixed rate upon the hire of houses or ships as of money.'

We are generally told in histories of banking, as, for instance, in that by Gilbart, that the first national bank was that of Venice, founded in the year 1157, but I agree with Mr. McLeod, that this institution was not at first, in any sense, a true bank. The State being deeply involved in debt, its creditors were formed into a corporation, and the debts made transferable like our consols. It was not until 1587 that the institution began to

take money on deposit. The depositors received a credit on the bank's books equal to the actual weight of the bullion placed there, which the bank undertook to keep intact in its vaults, and to repay to the depositor at any time, or to transfer to any one else.

The earliest real bank was that of Barcelona, founded in 1401. In this case the city funds were made responsible for any moneys intrusted to the bank, which not only received deposits, but exchanged money and discounted bills. The Bank of Amsterdam was founded in 1609. The so-called Bank of St. George, at Genoa, dates back to 1407, but does not appear to have done genuine banking business until 1675. The Bank of Stockholm, which commenced in 1668, was the first bank in Europe to issue banknotes, which until that time were totally unknown in the West, although, as we have seen, they had long been in use in China.

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Our coinage, however, is far more ancient than our banking system, in so far at least as our present information goes. Our ancestors, before the arrival of the Romans, are generally regarded as mere barbarians. Nevertheless, they were already acquainted with the art of coinage, which, as shown by Mr. Evans in his excellent work on The Coins of the Ancient Britons," appears to have commenced in Kent about 200 to 150 B.C., and to have spread over the south-east of England to Devonshire on the west and northwards as far as Yorkshire. The principal mints appear to have been at Camulodunum and Verulamium. The original coins were copies of Gaulish imitations of the staters of Philip of Macedon, which have a head of Apollo on one side and a chariot and horses on the other. Gradually, however, the execution became worse and worse, until at length no one looking at one of these coins for the first time would be able to tell which side was meant for the head of Apollo and which for the chariot and horses. The fact that the dies were much larger than the coins assisted in contributing to this result. Some of our coins are inscribed, and in one series we find the name "Cun," short for Cunobeline, the Cymbeline of Shakespeare, from whose name one learned antiquary has absurdly sup

posed that our word "coin" was derived. Other interesting inscribed coins are those of Commius, supposed to be the Atrebatian mentioned by Cæsar; of Tincommius and Eppilus the sons of Commius; of Tasciovanus the father of Cunobeline; of Dubnovellaunus, probably the Damno Bellaunus of the inscription of Augustus at Ancyra. I ought to add that among the latter coins are various curious types of purely native origin. Nay, not only had the ancient Britons a native coinage, but they were so civilized as to have attained the art of forgery, the false coins being of base metal plated over with gold or silver.

After the conquest, the native British coinage was replaced by Roman coins, great numbers of which have been discovered, and some of which are said to be even now occasionally met with in circulation. After the departure of the Romans, the Saxons, about the sixth century, commenced striking stycas, or halffarthings, and sceattas, from which comes our proverbial expression, paying one's shot."

Our mode of reckoning by pounds, shillings, and pence was introduced in Saxon times, the 17. being a pound of silver, though the penny, the 4th of 17., was the largest silver coin actually struck.

The "penny" is the most ancient representative of our coinage. The name first appears in the laws of Ina, King of the West Saxons, who began to reign in 688. The figure of Britannia on our present specimens was copied from a coin of Antoninus.

The mark was originally Danish, but is said to have been introduced here by Alfred; it contained at first 100, and afterward 160 pennies. It was never struck, but was only a money of account. Throughout Norman times the halfpenny and farthing were, as a rule, not separate coins, but halves and quarters of the penny very neatly cut. Though some Saxon halfpence are known, these coins were not struck in any quantity till the reign of Edward the First. Our gold coins recommenced under Henry the Third, who coined gold pieces intended to pass for twenty pence. Edward the Third struck gold florins, current for six shillings. This coin be

ing found inconvenient, he issued the noble," sometimes called the “rose noble," worth six shillings and eightpence, or half a mark. This, with its half and quarters, was our only gold coin till the "angel" of Edward the Fourth. Groats and half-groats were introduced by Edward the Third. They received their name from the French "gros," a large piece. It was one of the charges against Wolsey that he put his cardinal's hat on the money struck in the archiepiscopal mint at York. The "shilling" was first struck by Henry the Eighth. The silver crown, half-crown, and sixpence commenced under Edward the Sixth. The sovereign of twenty shillings was first struck by Henry the Seventh. The guinea commenced under Charles the Second, in 1663, and was so called from the Guinea gold from which it was made: it was withdrawn in 1815, when the sovereign and half-sovereign were again issued. In the middle ages the coinage was constantly deteriorated by having the edges clipped, now prevented by the milling of the edge, a process first used in 1560. The unsatisfactory state of the coin led to the use of "tradesmen's tokens."

But in addition to the deterioration of the coinage by wear and by clipping, the standard was gradually reduced by successive sovereigns. The denomination, weight, and fineness of silver coins have, however, remained unchanged since the time of Elizabeth; but the pound sterling, and its relation to the silver coinage, was not finally fixed until 1717. Gold was not adopted as our legal standard of value until 1816. Silver and copper, as every one knows, are now token coins, and only legal tender to a limited amount -i.e., the copper coins up to a shilling, and silver coins to forty shillings. The 'mint price" of silver is 5s. 6d. an ounce Troy-i.e., the ounce of silver is coined into 5s. 6d. The "standard" of silver is 37 parts of silver to 3 of copper. The quantity of copper and silver coin issued is regulated by Government according to the supposed requirements of the country, but any one can take gold to the mint and have it coined into sovereigns free of expense. Practically, however, this is never done, because the Bank of England is always ready to give coin for bullion, charging id. an ounce, which is

rather less than the loss of interest which would result from the time required for coinage. The sovereign is composed of 22 parts gold and 2 copper: most of those now in circulation are much worn, but when new they contain 113.001 grains of gold, and weigh 123.274 grains. An ounce of gold is therefore coined into 37. 175. 1od., which is generally termed the mint price of gold.

We sometimes hear surprise expressed that there should be a fixed price for gold. Gold, it is said, should be allowed to follow its market price. But when we are told that the mint price of gold is always 37. 175. 10d. an ounce, all that is meant is that an ounce of gold is coined into 31. 175. 10d. The price of gold is fixed in gold, or, in other words, sovereigns are always of the same weight. Sir Robert Peel asked his opponents the wellknown question, "What is 17. ?" and the simple answer is, that 17. is a certain quantity of gold, verified by the stamp of the mint.

There appears to be much uncertainty as to when, or by whom, coins were first struck in Ireland and Scotland. As regards the former country, they are never mentioned in the " Senchus Mor," which is said to have been compiled about A.D. 440, in which, when the precious metals are alluded to, which is but rarely, this is always by weight. Such is indeed the case even to a much later date. Thus, in 1004, Brian Boroimhe offered twenty ounces of gold on the altar of St. Patrick at Armagh, though coins are said to have been in use as early as the ninth century. The earliest Scotch coins are supposed to belong to the time of Malcolm the Third-about 1050 A.D.

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The derivations of the words relating to money and commerce are interesting and instructive. "Pecuniary" takes us back to the times when value was reckoned by so many head of cattle. The word money" is from moneta, because in Rome coins were first regularly struck in the temple of Juno Moneta, which again was derived from monere, to warn, because it was built on the spot where Manlius heard the Gauls approaching to the attack of the city. "Coin" is probably from the Latin cuneus, a die or stamp. Many coins are merely so-called from their weight, as, for instance, our pound, the French livre, Italian lira;

others from the metal, as the" aureus ;" the "rupee" from the Sanskrit "rupya," silver; others from the design, as the angel, the testoon, from teste or tête, a head; others from the head of the state, as the sovereign, crown; others from the proper name of the monarch, such as the daric, from Darius, the Philip, Louis d'or, or the Napoleon.

The dollar or thaler is short for the Joachimsthaler, or money of the Joachims valley in Bohemia, where these coins were first struck in the sixteenth century. Guineas were called after the country from which the gold was obtained, and the "franc" is an abbreviation of the inscription Francorum Rex. The "sou" is from the Latin solidus. The word shilling appears to be derived from a root signifying to divide; and in several cases the name indicates the fraction of some larger coin, as the denarius, halfpenny, farthing, cent, and mill. The pound was originally not a coin, but a weight, and comes from the Latin pondus. Our pound was originally a pound of silver, which was divided into 240 pennies. The origin of the word penny is unknown. Some have derived it from pendo, to weigh, but this does not seem very satisfactory. Our word" sterling" is said to go back to the time of the Conquest, but the derivation has been much disputed. Some have supposed that it

was first attributed to coins struck at Stirling, but for this there is not the slightest evidence; others, that the name was derived from coins having a star on the obverse, but no coins which could have given rise to such a name are known. The most probable suggestion is that it has reference to the Easterling, or North German, merchants.

Early English bankers seem to have been all goldsmiths as well as bankers, and it is, perhaps, just worth mentioning that in my own firm, as in several others, we still use certain books which are specially known as the "Goldsmiths." Sir Walter Bowes, a goldsmith of the sixteenth century, is recorded by Herbert in the history of the Goldsmiths' Company as having lent Henry the Eighth 300/. Another great goldsmith of this period was Sir T. Gresham, the founder of Gresham College and of the Royal Exchange, which was opened by Queen Elizabeth on January

23d, 1570.

Even Alderman Backwell, who lost 295,9947. 16s. 6d. when the Exchequer was closed by Charles the Second, was a retail jeweller, and Pepys records, on December 24th, 1660: "I went to chuse a payre of candlesticks to be ready for me at Alderman Backewell's." Mr. Price, in his interesting paper on Early Goldsmiths and Bankers," gives several accounts current appertaining to this period, and still in existence at Messrs. Childs', including, for instance, one for Prince Rupert for plate, dishes, candlesticks, etc. The oldest of our existing banks are probably Messrs. Childs' and Messrs. Martin's. In the reign of Elizabeth there was a goldsmith named John Wheeler, from whom the business passed to William Wheeler, Jr., and subsequently into the hands of their apprentices, Messrs. Blanchard and Child, whose names appear in the "Little London Directory, 1677. Sir Josiah Child, although he subsequently became a banker himself, attacked our profession with more vigor than common-sense in his new Discourse of Trade." He says" this gaining scarcity of money proceeds from the trade of bankering, which obstructs circulation, advances usury, and renders it so easy that most men, as soon as they can make up a sum of from 50l. to 100l., send it in to the goldsmith, which doth

and will occasion while it lasts that fatal pressing necessity for money visible throughout the whole kingdom, both to prince and people." Sir Francis Child, called by Pennant the father of the profession, is said to have been the first to lay aside entirely the goldsmith's business and become a pure banker in our sense of the term. The" Grasshopper" in Lombard Street claims to have been the place of business of Sir Thomas Gresham, though his actual residence was in Bishopsgate. In the directory of 1677, it was occupied by Messrs. Duncombe and Kent, from whom it descended to Messrs. Martin. Hoare's in Fleet Street goes back to James Hore or Hoare, who was warden of the Mint from 1679 to 1682, and who was probably established in business as early as 1661; they have occupied their present premises since 1692. The Bank of England, I may mention, was founded in 1694.

Although banking, in some form or

other, can, as we have seen, be carried back to an early period in history, and even in our own country has long existed, still in our national accounts a very archaic system was pursued until quite recently. It is indeed scarcely credible that the old wooden" tallies" were only abolished by Mr. Burke's Act, which was passed in 1782, but did not come into full effect till 1826, on the death of the last of the Chamberlains.

The tally was a willow stick, not exceeding five feet in length, about one inch in depth and thickness, with the four sides roughly squared. On one of the four sides the amount was expressed in notches. On each of the two sides next to the notched side the description of the payment was written. The stick was split in half through the notches. One half, constituting the tally, was given to the person making the payment into the Exchequer, the other half, the counter tally, or counterfoil, was kept at the Exchequer as a check.

There was no single notch for a larger sum than 1000l.; a notch of the gauged width of 1 inch denoted 1000/.; 1 inch, 100/.; inch, 10/.; and half a notch of this last size, 17.; of inch, 1s.; and the smallest notch, id.; one halfpenny was denoted by a small pounded hole.

In the "Return on Public Income and Expenditure," July 29th, 1869, the following account is given of the mode in which these tallies were actually issued.

The slip of parchment, or Teller's bill, as it was called, was thrown down a pipe into the Tally Court, a large room under the tellers' offices, notice being given to the Tally officer by a clerk calling out "down" through the pipe. The Teller's bill fell upon the large table in the Tally Court, which was covered with a checkered cloth. In the Tally Court sat officers of the Clerk of the Pells, and of the Auditor as performing the duties of the Chamberlain of the Exchequer. The Teller's bill was first recorded by the officer of the Clerk of the Pells, in his book of introitus or receipt, and then passed over to the Auditor's clerk, who entered it into a book called the bill of the day. A copy of each Teller's bill was written by the Auditor's clerk upon an indented form of receipt (up to 1826 upon the wooden tally, the amount being

expressed in notches only), and given upon his application, generally on the following day, to the receiver or other person paying in the money. At the close of the day, when all the Teller's bills had been sent down and entered, the bill of the day was sent on to the clerk of the cash-book, in which book all the receipts of the day were entered. The Auditor's cash-book was the foundation of all the accounts of the receipt of revenue, weekly, quarterly, and yearly certificates of which were transmitted from the Exchequer to the Treasury, from which the annual accounts of revenue were prepared and laid before Parliament.

In early days our bankers and merchants used to deposit their superfluous cash in the Tower of London for safe keeping. Charles the First seized the money there, amounting to 120,000l. A still more serious misfortune befell our predecessors, however, in 1672, when the Exchequer was closed by Charles the Second, at the instance of Lord Ashley and Sir Thomas Clifford, and when the amount seized was no less than 1,328,000l. The first" run" on record took place when the Dutch fleet sailed up the Thames, burned Chatham, and destroyed Sheerness. I have already alluded to the fact that such references to bankers as appear in ancient literature are far from being always of a complimentary character; such is also the case even in recent times. Lord Eldon is reported to have selected his bankers by a sort of inverse competitive examination. He thought them the stupidest in London, and he said that if he could find stupider, he would move his account. And it is no doubt true that probity and prudence, tact and knowledge of human nature, are more necessary to a banker than the possession of great genius. It is perhaps natural that 1 should be disposed to attribute the unfavorable remarks to which I have referred rather to jealousy than to conviction.

We may, I think, congratulate ourselves that we have contributed our fair share to those who have successfully labored to promote the welfare of the country. In political life, innumerable bankers have been useful members of the legislature. In some cases our banking families have held high office. In literature, the honored name of Grote