The last Act of this Parliamentary session proved the most important of all; it was the establishment of the Bank of England. Banking, now so universal, was but of very recent introduction to England. The Lombard Jews had a bank in Italy as early as 808; Venice had its bank in 1157; Geneva in 1345; Barcelona in 1401. In Genoa, Stockholm, Amsterdam, Hamburg, and Rotterdam there had long been banks, but in England men had continued, till within a very short time previous to this period, to hoard and pay out their own money from their own strong boxes. The goldsmiths of Lombard Street had of late become bankers, and people began to pay by orders on them, and travellers to take orders from them on foreign banks. It was now beginning to be strongly agitated to establish joint-stock banks, and there were various speculative heads at work with plans for them. One Hugh Chamberlayne and his coadjutor, John Briscoe, published a scheme of a land bank, by which gentlemen were to give security for their notes on their land; on the principle that land was as real and substantial property as gold. But the extravagant and unsound views as to the actual value of land which they promulgated ruined their credit. Because an estate was worth twenty thousand pounds at twenty years' purchase, they argued that it was worth that every twenty years, and, therefore, could be immediately convertible at the same rate for any number of years—as if they could put a hundred years' purchase in the first twenty, and raise the hundred years' value, or one hundred thousand pounds, on it at once.

There was, however, a more sober and shrewd projector, William Paterson, a calculating Scotsman, who in 1691 had laid before Government a plan for a national bank on sound and feasible principles. His scheme had received little attention, but now, though a million of money was raised by the lottery, another million was needed, and Paterson secured the attention of Charles Montague, a rising statesman, to his scheme. Paterson represented that the Government might easily relieve itself of the difficulty of raising this money, and of all future similar difficulties, by establishing a national bank, at the same time that it conferred the most important advantages on the public at large. He had already firmly impressed Michael Godfrey, an eminent London merchant, and the brother of the unfortunate Sir Edmundsbury Godfrey, with the immense merits of his scheme. They now submitted these merits, and the particularly attractive one to a young politician of raising himself by a happy mode of serving the Government, and acquiring immediate distinction for practical sagacity. Montague was a young man of high family, but a younger brother's younger son—poor, clever, accomplished, and intensely ambitious. At Cambridge he had distinguished himself as a wit and a versifier; but he was now in the Commons, and had made a rapid reputation as an orator and statesman by his management of the Bill for Regulating the Trials for High Treason. This man—vain, ostentatious, not too nice in his means of climbing, but with talents equal to the most daring enterprise, and who afterwards became better known as the Earl of Halifax—saw the substantial character of Paterson's scheme, and took it up. Whilst he worked the affair in Parliament, Godfrey was to prepare the City for it.

Montague submitted the scheme to the Committee of Ways and Means, and as they were at their wits' end to raise the required million, they caught at it eagerly. The proposed plan was to grant a charter to a company of capitalists, under the name of the Governor and Company of the Bank of England. This company was to have authority to issue promissory notes, discount bills of Exchange, and to deal in bullion and foreign securities. Their first act was to be to lend the Government twelve hundred thousand pounds, at eight per cent., and to receive, as means of repayment, the proceeds of a new duty on tonnage, whence the bank at first received the name of the Tonnage Bank. The Bill for establishing this bank was introduced ostensibly to Parliament as a Bill for imposing this new duty on tonnage; the charter of the proposed bank being granted in consideration of its making an immediate advance on the tonnage duty. In the Commons it underwent many sallies of wit and sarcasm, as one of the thousand speculations of the time; but in the City, where its real character was at once perceived by the Lombard Street money-dealers, it was instantly assailed by a perfect storm of execration. It was declared to be a scheme for enabling the Government to raise money at any moment and to any extent, independently of Parliament, and thus to accomplish all that the Charleses and Jameses had ever aimed at. To silence this suspicion, Montague introduced a clause making it illegal, and amounting to forfeiture of its charter, for the bank to lend any money to Government without the consent of the Parliament. This, however, did not lay the tempest. It was now denounced as a Republican institution borrowed from Holland and Genoa, and meant to undermine the monarchy; it was a great fact, the objectors urged, that banks and kings had never existed together.

Notwithstanding all opposition, however, the Bill passed the Commons; and though it met with fresh and determined opposition in the Lords, where it was declared to be a scheme of the usurers to enrich themselves at the expense of the aristocracy, on Caermarthen coolly asking them, if they threw out this Bill, how they meant to pay the Channel fleet, they passed it; and such was its success in the City, that in less than ten days the whole sum required by Government was subscribed. Such was the origin of that wonderful institution, the Bank of England. One other measure of importance was carried by this Parliament, namely, the Triennial Act, limiting Parliament to three years.

Immediately that the Bank of England Bill had received the royal assent, William prorogued Parliament, and rewarded Montague for his introduction of the scheme of the bank, by making him Chancellor of the Exchequer. Shrewsbury was now induced to accept the Seals. William having shown him that he was aware of his being tampered with by the agents of James, demanded his acceptance of them as a pledge of his fidelity. To secure him effectually—for William knew well that nothing but interest would secure Whigs—he conferred on him the vacant Garter and a dukedom. Seymour was dismissed, and his place as a Lord of the Treasury was given to John Smith, a zealous Whig, so that excepting Caermarthen, Lord President, and Godolphin, First Lord of the Treasury, the Cabinet was purely Whig. The old plan of mixed Ministries was being rapidly abandoned.

William had closed the session of Parliament on the 25th of April, 1694, and in a few days he was sailing for Rotterdam. Before going, however, he had ventured to refuse offers of peace from Louis. This ambitious monarch, by his enormous efforts to vanquish the Allies, had greatly exhausted his kingdom. Scarcely ever had France, in the worst times of her history, been reduced so low, and a succession of bad seasons and consequent famine had completed the misery of his people. He therefore employed the King of Denmark to make advances for a peace. He offered to surrender all pretensions to the Netherlands, and to agree to the Duke of Bavaria succeeding to Flanders on the death of the King of Spain; but he made no offer of acknowledging William and Mary as rightful sovereigns of England. Many thought that William ought, on such conditions, to have made peace, and thus saved the money and men annually consumed in Flanders. But Parliament and the English people both knew Louis far too well to suppose that the moment that he had recruited his finances he would not break through all his engagements and renew the war with redoubled energy. His people were now reduced in many places to feed on nettles, and his enemies deemed it the surest policy to press him whilst in his extremity.

COSTUMES OF THE TIME OF WILLIAM AND MARY.

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Finding that he did not succeed in obtaining peace, Louis resolved to act on the defensive in the coming campaign in every quarter except in Catalonia, where his whole fleet could co-operate with the Count de Noailles, the commander of his land forces. William, who had received intelligence of this plan of the campaign, before his departure, ordered the British fleet under Russell to prevent the union of the French squadrons from Brest and Toulon. Russell was then to proceed to the Mediterranean to drive the French from the coast of Catalonia, and co-operate with the Spaniards on land. Meanwhile, the Earl of Berkeley, with another detachment of the fleet, was to take on board a strong force under the command of General Talmash, and bombard Brest in the absence of Tourville. All this was ably planned, but the whole scheme was defeated by the treachery of his courtiers: by Godolphin, his own First Lord of the Treasury, and by Marlborough, against whom the most damning evidence exists. Macpherson and Dalrymple, in the State papers discovered by them at Versailles, have shown that the whole of William's plans on this occasion were communicated to James by Godolphin, Marlborough, and Colonel Sackville, and have given us the strongest reasons for believing that the preparations of the fleet were purposely delayed by Caermarthen, the new Duke of Leeds, Shrewsbury, Godolphin, and others, letters for that purpose being discovered addressed to them by James through the Countess of Shrewsbury.