of excise duties,
taxes on imports and exports, and a hearth tax were established as a
permanency for paying the expenses of government, besides special
taxes of various kinds for special demands.

Borrowing, by merchants and others for ordinary purposes of business,
became much more usual. During most of the seventeenth century the
goldsmiths were the only bankers. On account of the strong vaults of
these merchants, their habitual possession of valuable material and
articles, and perhaps of their reputation for probity, persons who had
money beyond their immediate needs deposited it with the goldsmiths,
receiving from them usually six per cent. The goldsmiths then loaned
it to merchants or to the government, obtaining for it interest at the
rate of eight per cent or more. This system gradually became better
established and the high rates decreased. Payments came to be made by
check, and promissory notes were regularly discounted by the
goldsmiths.

The greatest extension in the use of credit, however, came from the
establishment of the Bank of England. In 1691 the original proposition
for the Bank was made to the government by William Patterson. In 1694
a charter for the Bank was finally carried through Parliament by the
efforts of the ministry. The Bank consisted of a group of subscribers
who agreed to loan to the government L1,200,000, the government to pay
them an annual interest of eight and one-half per cent, or L100,000 in
cash, guaranteed by the product of a certain tax. The subscribers were
at the same time incorporated and authorized to carry on a general
business of receiving deposits and lending out money at interest. The
capital which was to be loaned to the government was subscribed
principally by London merchants, and the Bank began its career in the
old Grocers' Hall. The regular income of L100,000 a year gave it a
nucleus of strength, and enabled it to discount notes even beyond its
actual deposits and to issue its own notes or paper money. Thus money
could be borrowed to serve as capital for all kinds of enterprises,
and there was an inducement also for persons to save money and thus
create capital, since it could always bring them in a return by
lending it to the Bank even if they were not in a position to put it
to use themselves. Along with the normal effect of such financial
inventions in developing all forms of trade and industry, there arose
a remarkable series of projects and schemes of the wi