In the year 1667 occurred the first run of which we have any account in the history of banking. The business of the new-fashioned bankers had increased so fast, and they had become so numerous, that their trade was supposed to be at its height in this year; when, during the time that a treaty of peace was under consideration, the Dutch fleet sailed up the Thames, blew up the fort of Sheerness, set fire to Chatham, and burned four ships of the line. This disaster occasioned great alarm in London, particularly among those who had money in their bankers' hands, as it was imagined that the king would not be able to repay the bankers the money they had lent him. To quiet the fears of the people, the king issued a proclamation, declaring that the payments to the bankers should be made at the Exchequer the same as usual.

In 1672, five years afterwards, a much greater calamity befell the bankers; for King Charles II shut up the Exchequer, and would not pay the bankers either the principal or the interest of the money which he had borrowed. The amount then due by the king was £l,328,-526, which he had borrowed of the bankers at eight per cent., and which he never repaid.

The mode in which the bankers transacted their loans with the king was this: As soon as the parliament had voted to the king certain sums of money out of particular taxes, the bankers advanced at once the money voted by parliament, and were repaid in weekly payments at the Exchequer as the taxes were received. The mode of making the payments and the rate of interest were agreed upon at the time of making the loan.

The shutting up of the Exchequer occasioned great distress among all classes of the people. Persons not in trade had then no way of employing their money with advantage but by placing it out at interest in the hands of a banker. Hence, not merchants only, but widows, orphans, and others, became suddenly deprived of the whole of their property. They came in crowds to the bankers, but could obtain neither the principal nor the interest on the money they had deposited. The clamor became so great that the king granted a patent to pay six per cent interest out of his hereditary excise; but he never paid the principal. But, about forty years afterward, the parliament made arrangements by which the debt was assumed to be discharged; that is, it became a part of the National Debt, but the creditors received nothing.

The business of banking remained entirely in the hands of the "new-fashioned" bankers until the establishment of the Bank of England, in the year 1694.

4. Transmission of Money. The transmission of money was in ancient times effected by sending a messenger with the coin. During the Middle Ages, it was accomplished by means of bills of exchange, which were purchased by merchants. Ultimately, a special class of persons carried on this kind of traffic, and purchased or sold bills to suit the convenience of parties who wished to deal with them. The pecuniary transactions of independent nations are still adjusted in the same way. But the transmission of money from one part of the country to another part, is more frequently effected upon the principle of transfers, without the passing of any bill. This branch of banking is fully dealt with elsewhere.

The Bank of England. Previous to the year 1694 there were only four banks of any great consequence in Europe, but on the 27th of July of that year a charter was granted by the reigning sovereigns, William and Mary, for establishing the Bank of England, which for opulence, importance, and extent of circulation became the greatest in the world.

The object of the promoters was to raise money for the use of the government. When the scheme was brought before the parliament, it caused a long and violent discussion. One party dwelt upon the national advantages that would accrue from such a measure. They said it would rescue the nation out of the hands of extortioners and usurers, lower the rates of interest, raise the value of land, revive and establish public credit, extend the circulation, and consequently improve commerce, facilitate the annual supplies for the national expenses, and connect the people more closely with the government.

The opposition party declared that such a bank would become a monopoly and engross the whole money of the kingdom; that it must infallibly become subservient to government views, and might be employed for the worst purposes of arbitrary power; that instead of assisting, it would weaken commerce, by tempting people to withdraw their money from trade and employ it in stockjobbing; that it would produce a swarm of brokers and jobbers to prey upon their fellow-creatures, encourage fraud and gambling, and thus corrupt the morals of the nation.

Notwithstanding these objections, the Act passed both houses of parliament, and received the royal assent.