CONTENTS
1x
which advanced money on more favourable terms than the goldsmiths,
The credit of its notes was attacked during the recoinage; but, despite
some hesitancy on the part of the publie, various paper forms of credit
came into general use, and the issue of Exchequer Bills helped to popularise
paper currency. » ” " . . . . . . . 439
217. Facilities for Trade. The Bank also facilitated the formation
and employment of Capital, and proved, as had been anticipated, to be
of great advantage fo many trades; it did not divert money from pro-
ductive employments, but gave opportunities for trading on borrowed
capital. . . . . . . . . . . 442
218. Misunderstandings in regard to Credit. The nature and con-
Bitions of Credit were imperfectly recognised. Business assumed a specu-
lative character, especially in connection with the Stock Exchange, and
Bubble Companies were formed for South Sea trading, and mining projects.
The Bank of England acquired experience; while Law’s failure in France
gave a serious warning; and London was becoming the chief financial centre
of the world, The reaction after over-trading brought about the failure
of the Ayr Bank in 1772. The Bank of England warded off disaster in 1782,
but the expansion of trade in 1792 was followed by a crisis, which the Bank
failed fo minimise. Still the conditions of issuing convertible paper were
becoming better understood. . ’ . . . . . . 448
219. Scotch Banking. The banking system in Scotland facilitated the
formation of capital there. The Bank of Scotland issued £1 notes to the
public; it had to reduce its operations in 1704, and, after a period of fierce
competition with the Royal Bank, developed a system of cash credits, and
received deposits. The rivalry of well-conducted banks led to a general
adoption of paper money in Scotl®nd. 453
XIV. PARLIAMENTARY REGULATION oF COMMERCIAL DEVELOPMENT.
220. Commercial Relations with France and Portugal. Burleigh’s
scheme of fostering all elements of Power, by regulation, had ceased to be
appropriate; the Tories would have given discriminating permission to
commerce of all kinds, but the Whigs discouraged trades which did not react
favourably on industry, and relied on indications furnished by the balance
of trade to show what was hurtful. The effort to render trade subservient to
industry led to the prohibition of French trade, and to the securing of the
Portuguese market for cloth, by admitting Portuguese wines on special
lerms. This Methuen Treaty presented an obstacle to ratifying the treaty
of 1713, which would have allowed the growth of French trade, and this
policy was not abandoned till 1786, . . . . 458
221. The New Attack on the East Indian Trade, The same economic
principle underlay the fresh attack on the East India Company, which imported
goods that competed in the home market with English manufactures, such
as fans, woollen cloth, and silk. There were also good grounds for criticising
the conduct of the Company with regard to the employment of its capital
and the action of its officials in carrying on private trade. The Directors
and their-agents often differed as to the ‘investment’ and ‘remittances’ ; and
the business was so intricate that supervision was impossible and corruption
