13. BANKING AND THE STOP OF THE EXCHEQUER (p. 130)--Banking was now becoming a regular business, carried on especially by goldsmiths, who often advanced money to the sovereign upon the security of taxes or personal credit. A pamphlet of 1676, called “The Mystery of the Newfashioned Goldsmiths or Bankers Discovered,” shows how banking and money-lending had become a regular business, and gives the year 1645 as about the time when commercial men began regularly to put their cash in the hands of goldsmiths. It also states that “the greatest of them (_i.e._ of the goldsmiths) were enabled to supply Cromwell with money in advance upon the revenues, as his occasions required, at great advantage to themselves.” Similarly the famous goldsmith George Heriot had frequently obliged James I. It is well known how the London goldsmiths advanced Charles II. as much as £1,300,000, at 8 to 10 per cent. interest, upon the security of the taxes; and how (in 1672) he suddenly refused to pay them, saying they must be content with the interest, and closed the exchequer, thus causing a serious commercial panic. The unsatisfactory method of obtaining loans from goldsmiths and other private persons was partly the cause of William Paterson’s project, now known as the BANK OF ENGLAND (1694). Paterson offered to provide the Government of William III. with £1,200,000, to be repaid by taxation on beer or other liquors and {248} by rates on shipping, while those who subscribed this money were incorporated into a regular company which was to receive 8 per cent. interest and also £4000 a year for management. Thus the matter of loans was first placed upon a proper basis and the Bank thus formed, and supported by Government credit, took at once a leading position in English commerce. (Cf. Rogers’ _First Nine Years of Bank of England_.) 14. NATIONAL DEBT (p. 145)--This loan, mentioned in the last note, was the beginning of a regular National Debt, the system of contracting loans upon the security of the supplies or upon Government credit, and of paying them off gradually in succeeding generations. (Cf. my _Commerce in Europe_, p. 145, and Grellier’s _National Debt_.)