The beneficial effects of this establishment in Hol land were soon perceived ; and bank-money imme diately bore a premium, or agio, which is a term to denote the difference of price between the money of the bank and the coin of the country. When we consider that coin is only a representative of commo dities, and that its utility arises solely from its being a generally acknowledged standard of value, by which mankind, in the civilised state of society, are enabled to calculate the price of articles of exchange, it is not surprising, that bank-receipts, which repre sent property also, and, at the same time, are not liable to risk, danger, or deterioration of any kind, should be held in higher estimation than coin, which is exposed to robbery and•all sorts of casualties. In all countries, where banks have been regular in their transactions, and their responsibility•undoubted, their paper has carried a premium, more or less, accord ing to circumstances ; and the agio of Amsterdam was generally about five per cent.
The amount of the capital of the Bank of Amster dam was never exactly ascertained. It was original. ly constituted by deposits of coin; and there was full value in its coffers for all the credits and receipts it issued. The bank, however, gave credits and receipts also upon deposits of gold and silver bullion, at the rate of five per cent. less than the mint price of such bullion, which was restored again to the owner, if lie called for it within six months, upon paying one fourth per cent., if the deposit was in silver, or one half per cent. if in gold. But if the term of six months was allowed to expire, the hank retained the bullion at the price stated in its books.
The advantage of making deposits in this bank is twofold. First, The credit enables the merchant to pay his bills of exchange. Second, The receipt gives him an opportunity of selling his bullion at an ad vance of price, if the market shall fluctuate in his fa vour. Although none can draw out bullion without producing a receipt, and re-assigning bank-money equal to the price at which the bullion had been re ceived, yet it is not absolutely necessary that both credit and receipt should always remain in the hands of the same person ; as he who has the receipt will find bank-money to buy at the ordinary market price, to enable him to relieve the bullion ; and the owner of credit will, at all times, find receipts in abun dance. But to prevent any extraordinary rise in the price of bank-money or receipts, which speculation, or other causes, might sometimes induce, the bank adopted the resolution of selling bank-money for the current coin, at an agio of five per cent ; and if buy ing it, at the rate of four per cent.
It is generally understood, that the Bank of Am sterdam keeps in its repositories the full value in mo tley or bullion of all the receipts it has issued ; but it is not absolutely necessary to do so, as many of these receipts have expired. But that there is value in the bank equal to all the demands that can be made upon it, there is little doubt ; for the city is guarantee that th:s should be the case, and the directors, who are annually changed, compare the treasure with the books, and would therefore detect any acts of fraud br imposition.
The four reigning burgomasters are invested with the direction of the bank ; and the city of Amster dam derives a considerable revenue from it, which arises from the following sources :—For all depo sits, a fourth or half per cent. must be paid—from every person who opens an account, a fee'of ten guil ders is exacted ; and for every additional account, three guilders three stivers—for every transfer, two stivers, or six stivers if the transfer is less than 300 guilders. If any person shall overdraw his account, he is fined three per cent. on the amount ; and his order is set aside. There is also a considerable pro fit from the sale of foreign coin or bullion, which is always kept till it can be sold to advantage, and like wise, by selling bank-money at five per cent. agio, and purchasing it at your per cent. From these va rious resources, the Bank of Amsterdam became rich and prosperous ; and it was supposed to retain in its repositories more gold and silver than any other es tablishment of the kind in Europe.
Previous to the year there were only four considerable hanks in Europe ; but on the 27th July of that year, a charter was granted by William and Mary, for establishing the BANE or ENGLAND) which, for opulence and extent of circulation, is now the greatest in the world. William Paterson, a na tive of Dumfries-shire, in Scotland, was the projector of this bank, and, it is said, he took the Bank of St George, in Genoa, for his model. Michael God frey, a gentleman of great consideration in the city of London, assisted Paterson to arrange the esta blishment. The charter was granted for the term of twelve years ; and the corporation was determi nable on a year's notice. A governor, deputy governor, and twenty-four directors are annually elected from the proprietors, for managing the af fairs of the company, but not above two-thirds of the directors of the preceding year can be chosen. A governor must be possessed of 4'4000 stock, and a director of 42000, before he is eligible ; and it is requisite, that an elector should hold £500 stock to entitle him to vote at general courts.