Banks instituted to prevent the abuses from bad coins, and from adulterations in the standards of monies.

53. The oldest bank now in Europe, I think, is that of Venice; and the chief, if not all, of the rest, were instituted in the last century, and much upon the same model. The bank of Amsterdam was established in 1607; that of Hamburgh in 1619, and that of Nuremburgh in 1621.

It appears, that the main if not the sole design of erecting these banks, was for the fixing a kind of an indelible standard of money; and thereby, to secure merchants and others from losses by bad coins, whether base or light; and from the dire effects of adulterating the standards of monies, either at home, or by the neighbouring states. These banks have answered admirably well the ends of their institution; and it were to be wished, that those ends had been more regarded in the establishment of our own. At the times of establishing the above banks, certain known coins of given weights and fineness, then current at certain rates in the respective places, were fixed upon as a perpetual standard, which from thenceforward were called bank money. As the current coins became afterwards diminished, either by legal adulterations at the mints, or by wear, or otherwise, a distinction was made between current and bank money, called aggio; and according to the real difference between these two sorts of money, the aggio amounted to more or less per cent. These wise establishments contributed greatly, towards stopping those baneful measures of adulterating the standards of money, that had been so frequently and so generally practised, in the dark preceding ages. The genius of trade breathes and requires a certain degree of security and freedom; and banks, such as we have been speaking of, can hardly ever take place under arbitrary governments.