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PAPER-MONEY 
$39 
in 1816*, when silver sank to the position of a token money, AD 1s 
and gold became the sole standard for legal tender. ’ 
216. When action had once been taken for the restora- 
tion of the metallic currency, much benefit accrued to the 
community from the success of the Bank of England in T%e 
popularising the use of paper as a representative of coined a 
money. This form of circulating medium had been intro- 42, 
duced in Sweden in 1658, and Killigrew had advocated its ot 
introduction into England in the time of Charles II. There paper 
was some doubt at first, both as to the form of wealth which were pro- 
might serve as a guarantee for their payment, and as to the wien 
possibility of inducing the public to accept them, though 
there was a general feeling that if they were rendered 
available for the payment of taxes? ordinary citizens would 
accept them in discharge of public debts. Both problems 
were solved in an excellent fashion by the Bank of England; 
the interest due from Government to this corporation gave it 
an ample fund to guarantee the convertibility of its notes; 
and the public were glad to accept this new form of money 
from a great Company, which offered them loans in its own 
notes on very favourable terms. 
The Bank of England consisted of a body of subscribers 
who lent £1,200,000 to Government in 1694, on the under- 
standing that, out of the payments of tonnage? they should 
receive 8°/,, or in all £100,000 per annum. They were also 
permitted to engage in the business of banking in their 
corporate capacity; that is to say, they were to receive 
money on deposit and to lend it out at interest. This sort 
of business had been carried on to a considerable extent by 
goldsmiths, but the Bank developed it enormously because which 
they were able to offer better terms. The goldsmiths were advanced 
accustomed to lend coins, or bills which represented bullion 7.7 sz, 
actually in their possession. The Bank was able to make {me ian 
loans to an amount which exceeded the total of the deposits smiths. 
it received : for it could issue notes. to meet which it had no 
the Bank of 
England, 
1 56 Geo. III. e. 68. 
* Killigrew, 4 Proposal showing how this Nation may be vast gainers by all the 
sums of money given to the Crown, p. 8. [Camb. Univ. Lib. mm. 24, 8 (1).] 
8 A tax levied on ships according to their tonnage. not on tuns of wine, as in 
the phrase tunnage and poundage.