Every merchant was obliged to keep an account with the bank in order to pay his foreign bills of exchange, and once having made a deposit it was to his advantage to continue it, because the moment he withdrew his money and mingled it with the current money in trade, from which it was not readily distinguishable, it fell in value to the level of the current

Advantages of the Bank money. "While it remained in the coffers of the bank its superiority was known and recognized, but when it came into the hands of private individuals, its superiority could not well be ascertained without more trouble than the difference was worth" (Adam Smith in Wealth of Nations). The difference in value between money in bank and current money sometimes reached as high as nine per cent., but was usually about four per cent., and this (called the agio) the depositor lost by withdrawing his deposit.

In 1683 the bank established a system of making advances upon deposits of coin. Under this system a depositor was allowed to withdraw an amount of bank money not far from the value of the specie, and upon this he was charged interest. These advances were commonly made for a period of six months, and in case the borrower failed to renew or pay the loan at maturity, the margin of his deposit over and above the amount of his withdrawal was forfeited to the bank. The business of advances upon specie deposits grew in the eighteenth century to an enormous volume, and completely superseded the earlier practice of simple deposit. Then the administrator of the bank began to permit individuals at times to transfer more bank money than their deposits of specie warranted, which was equivalent to giving permission to overdraw.

Mismanagement and a diminishing commerce are the causes which, after two hundred years of useful services, led to the decline of the Wisselbank. Wars and the growth of manufactures had changed the channels of trade, and Dutch ships no longer possessed a monopoly of the carrying business. The center of the financial world moved westward to London, and the Bank of England was coming into prominence as a great financial agent. Besides there had come about a desire for an improvement in the system and methods of banking to conform more to the requirements of commerce, a larger scope in bank functions, and the Bank of England was more in conformity with this idea. The Wisselbank was finally dissolved and went out of business in 1819. The present Bank of the Netherlands, which may be considered its successor, was founded in 1814 with authority to make loans upon commercial paper and other public securities. It is also the bank of issue of the currency of the Netherlands, and keeps the funds of the state and the cash of the postal savings banks. There is no limit upon the circulation of the bank, but the law requires that it must be secured by a reserve of two-fifths of the aggregate of the circulation and demand liabilities. This reserve consists chiefly of gold.

The Bank of France was established in 1800, the First Consul being one of its original stockholders. In 1803 its scope was enlarged and it was endowed with the exclusive privilege in Paris of issuing circulating currency, a monopoly which was finally extended so as to cover the whole of France, and which it still enjoys. In some respects the bank is the greatest of financial institutions, and enjoys a reputation for solidity at home and abroad. While the Bank of France is the only one of issue, there are numerous private banks in Paris and scattered throughout the country which do a general deposit, discount and exchange business. The capital of the bank is 182,500,000 francs, and its circulation limit is 5,000,000,000 francs - the greatest of any financial institution in the world. While nominally a private banking house, the Bank of France is really a semi-official institution, for the reason that, being a monopoly, its operations are under government control. The management of the bank is vested in a board of fifteen regents and three inspectors or auditors, but the governor and two deputy governors are appointed by the Chamber of Deputies. Only the 200 stockholders who hold the largest number of shares are allowed to attend the annual meeting and participate in the election of officers. French statesThe Bank of France men believe that private ownership of the bank is an advantage, since it and the government have thus been enabled to be of assistance to each other at various times, in financial and political crises. M. Thiers said, "The bank saved us because it was not a state bank," by advances when the government was hard pressed, as in 1871. On account of its issue of the circulating medium, the impression prevails among the uninformed people of France that the bank is a government institution, and it is respected as such, but business men know that while this is not the case, the government could not allow it to fail, and that behind it is the fortune of the nation. The note issue is regulated by law, and has been gradually increased until it has reached its present enormous volume.

The functions of the bank as prescribed by law are: "To issue bank notes payable on demand; to discount bankers' drafts and commercial bills, drawn at a fixed period not exceeding three months and bearing the names of business people and others well known to be solvent; to collect bills remitted them by private parties or public establishments; to receive in account current sums for deposit with the bank by private individuals or public institutions, and to pay amounts drawn to the extent of the funds deposited; to keep a record of voluntary deposits of all securities, bullion and all kinds of gold and silver money; to make advances upon French bills and French securities, upon bullion and foreign coins, in accordance with a certain proportion fixed by law and the terms fixed by the statutes of the bank; and, finally, to deliver to any person applying therefor orders from Paris to their branch offices, and orders on Paris from the branch offices."