their necessities.  ‘The plan,’ says Macaulay, ’was that twelve hundred thousand pounds should be raised at what was then considered as the moderate rate of 8 per cent.’  In order to induce the subscribers to advance the money promptly on terms so unfavourable to the public, the subscribers were to be incorporated by the name of the Governor and Company of the Bank of England.  They were so incorporated, and the 1,200,000 L. was obtained.

On many succeeding occasions, their credit was of essential use to the Government.  Without their aid, our National Debt could not have been borrowed; and if we had not been able to raise that money we should have been conquered by France and compelled to take back James II.  And for many years afterwards the existence of that debt was a main reason why the industrial classes never would think of recalling the Pretender, or of upsetting the revolution settlement.  The ‘fund-holder’ is always considered in the books of that time as opposed to his ‘legitimate’ sovereign, because it was to be feared that this sovereign would repudiate the debt which was raised by those who dethroned him, and which was spent in resisting him and his allies.  For a long time the Bank of England was the focus of London Liberalism, and in that capacity rendered to the State inestimable services.  In return for these substantial benefits the Bank of England received from the Government, either at first or afterwards, three most important privileges.

First.  The Bank of England had the exclusive possession of the Government balances.  In its first period, as I have shown, the Bank gave credit to the Government, but afterwards it derived credit from the Government.  There is a natural tendency in men to follow the example of the Government under which they live.  The Government is the largest, most important, and most conspicuous entity with which the mass of any people are acquainted; its range of knowledge must always be infinitely greater than the average of their knowledge, and therefore, unless there is a conspicuous warning to the contrary, most men are inclined to think their Government right, and, when they can, to do what it does.  Especially in money matters a man might fairly reason’If the Government is right in trusting the Bank of England with the great balance of the nation, I cannot be wrong in trusting it with my little balance.’

Second.  The Bank of England had, till lately, the monopoly of limited liability in England.  The common law of England knows nothing of any such principle.  It is only possible by Royal Charter or Statute Law.  And by neither of these was any real bank (I do not count absurd schemes such as Chamberlayne’s Land Bank) permitted with limited liability in England till within these few years.  Indeed, a good many people thought it was right for the Bank of England, but not right for any other bank.  I remember hearing the conversation of a distinguished merchant in the