A Letter to a Friend concerning CREDIT, and how it may be restored to the Bank of ENGLAND: Being the Original of a Copy lately published, wherein were many Alterations and Additions that are not in this, now published by the Author.  
SIR,  
YOUR Affection for the present Government, and that prudent Zeal and Concern you have constantly expressed for the Honour and Welfare of your Country, have induced me to offer you my Thoughts upon the present Circumstances of our Affairs with relation to Credit: and I think I cannot begin more properly than by considering the natural Causes of it, as obtained either by a private Goldsmith, or Banker, or by a more Public and National-Bank. And,  
First of a private Banker: It is the Belief that the generality of Men are possessed, with of his Ability, Care and Honesty; that is, Men believe that such a Banker hath a good Foundation, is a careful, cautious, and honest Man; that he hath an Estate to satisfy every Creditor, and will not dispose or alienate any part of it, but what he really knows to be an Overplus, or more than will answer all his Debts; that doth not launch out his Money in many Foreign Adventures, or on doubtful Projects, or uncertain Funds: a Person having once obtained such a good Opinion amongst the Generality of Men, and they finding they can have their Money when they demand it, are willing to take his Bills or Notes rather than Money, for their Ease in paying and receiving, and to avoid the Loss that often happens by bad Money, or shortness in Tale. I say, 'tis for the  Reasons that any Banket's Notes pass currently in all Payments, and are esteemed equal to Money; and not because Men do generally believe, that a Banker hath always Money lying by him to pay all his Debts, though they should be demanded all at once; none that understand themselves, can have such an odd Conceit: if a Banker should do so, from whence could he get Profit to maintain Tellers, Book-keepers, Porters, pay great Rents, and get something over and above to reward his Care and Pains?  
It is said, that one private Banker in Lombardstreet had a Credit at one time for 1100000 Pounds Sterling, when probably no Man believed he had at the same time one twentieth part of that Sum by him to pay it with; but both he and his Creditors believed that whilst he gave no occasion to suspect or question his Ability and Honesty to pay every one, it would be next impossible, that all his Creditors should come at once to call their Money out of his Hands, but as fast as some called it out, others would bring it in, and that would enable him to pay every Man's Demand, and so preserve his Credit entire.  
But on the contrary, whenever the Generality of Men have entertained an Opinion, That a Banker is careless, prodigal, dishonest, or doth alienate any part of his Estate, more than is truly and properly his own, or engageth his Money in hazardous Adventures, new Projects, or doubtful and remote Funds, by which he may be in danger to lose a great part of his Estate, or not be able to command it in any reasonable time (whereby is occasioned a Jealousy of him) his Credit will presently sink, and all his Creditors come upon him to take their Money out of his Hands, fearing it not safe there; and then no Body will accept of his Notes in Paiment.  
For the very same Reasons, and by the same Methods, a Public Bank may establish and preserve, or destroy its Credit.  
If a Public Bank be established upon a Fund that is certain, secure, and inviolable, not to be taken away, lessened, changed or altered for the worse, either as to Time or Security, upon any pretence whatever, either by King or Parliament, without the free Consent of the Proprietors; and that the Managers of it are Persons of clear Reputations, Estates, Prudence, and generally esteemed so, and are careful not to divide any part of their Stock, but only the bare Interest and Profits, and also cautious not to lend their Money upon any remote or uncertain Funds, or employ it in any hazardous ways; I say such a Bank so managed; cannot fail of having a great and lasting Credit, and will never be in danger to be run upon by its Creditors, because they can have no reason to fear, or distrust the Safety of their Money, but may be sure to have it whenever they demand it.  
If the Fund of a Public Bank be made as secure and unalterable as any Man's Freehold (as indeed it ought to be, in case you would make it a Bank of Credit, and by that Credit supply the Nation's Want of real Species) than no Man will scruple to trust that Bank with his Money upon the Security of that Fund, no more than Men scruple to lend Money by way of Mortgage upon an Estate in Fee-simple, whereof the Title is clear and unquestionable: for the same Law that gives me a Title to my , gives the Bank an undoubted Title to their Fund, during the time contracted for with the Public, or till the Purchase-Money be repaid: And therefore any Supreme Power or Government may with equal Justice enter upon one as they can violate the other. No Fund or Funds upon which a Bank is established, and which the Members of it have purchased with their Money, or upon which a Bank or other particular Persons have lent their Money, should be taken away, changed or altered, except only with the free and voluntary Consent of that Bank, or those Persons: for the taking away, changing or altering any Parliamentary Funds without such free and voluntary Consent, will render them precarious and uncertain, and by a natural consequence destroy their Credit and Esteem.  
And also when the Parliament grant the King a Tax upon any thing, and give it him for a certain Sum, and to come in within a certain prefixed time, and empower him to borrow, and encourage the Subjects to lend so much as they give it for, if this Tax or Fund prove deficient by any Means or Occasion whatever, and bring not in the full Sum it was given for, it cannot be thought reasonable, that the Subjects who lent their Money in expectation to have it repaid them within the Term limited by that Act, and therefore lent it upon a less Interest, should either lose their Money, or wait for it a much longer time, but should have the Deficiency made good to them out of the next Money that is raised. And if that Method was constantly observed, no Man would scruple to lend his Money upon the latter part of any Parliamentary-Funds, which otherwise none will adventure to do, and that will hinder the King from Loans beyond the half of the Fund, or at farthest beyond so much as every Man believes will most infallibly come in upon that Fund; and by that means the King's Occasions will not seasonably be supplied, but he must wait till the Collector can receive and pay the Money into the Exchequer: how that will suit with our Circumstances, especially in Time of War, I leave to the Judgement of others.  
I think it is obvious to every Man, that since this War, a considerable part of our Treasure, I mean of Gold and Silver, is exhausted; the Remainder of our Money is by the recoining of it, reduced to one half of what it was before in Tale or Denomination; that is, what we called before five Millions of Pounds Sterling, is reduced to two Millions and a half. And almost all that which is commonly called Paper-Credit, is sunk, lost, and become useless: And with that Paper-Credit, that is, with Goldsmiths, and Bank-Notes, which amounted to near as much as all our current Coin, the greatest part of our Trade in and about this City of London was formerly driven; all Foreign and Inland Bills of Exchange, and all great Payments were made in those Notes, and very seldom any considerable Sums were paid or received in Money; so whilst those Notes continued in esteem and par with Money, they answered all the Ends and Uses of Money in Trade, and Money was only needful in the Markets, and for smaller Payments, for all which Purposes, a small quantity of it was sufficient; and that made Money seem to be abundantly more plentiful among us, than it was in reality. But now it is plain we have scarce Money enough to turn the Markets, much less to carry on our Foreign Trade.  
The truth of what is said above being granted, I must conclude, we have not in the Kingdom one fourth part of the Money and Notes (which served as well as Money) that we had a few Years since; and it is as certain, that according to the Proportion that we have now less in Money and Credit, our Loans to the King and our Trade will be less.  
Nothing but a long continued Peace, and a well managed Foreign Trade, can restore that Treasure this War hath drained from us; and how it is possible we should now carry on our Trade to that degree we formerly did, with less than one fourth part of the Money and other Means we then had, I cannot understand.  
And therefore since we have not real Species to do it with, nor can hope in any reasonable number of Years sufficiently to increase our Species, I think there is no other way or Means left us, either to carry on the War or our Trade, with or without a War, to the Honour and Advantage of this Kingdom, but only by restoring Credit, and by that Credit supply our want of real Coin.  
How such a Credit can be obtained is the Question.  
And for my part, considering our present Circumstances, I think it cannot be effected any other way than by the Bank of England, as now established; and I am confident that Bank could do it, if they had those Privileges and Encouragements the King and Parliament could grant them, without being prejudicial to any Subject.  
It is certain, that all forcible and compulsive Means would destroy or frustrate that Credit they are intended to establish and preserve.  
The only sure way to obtain a lasting Credit must be easy, free and natural; Men will not trust their Money any where, nor with any Person against their Inclinations: But whilst they believe their Money is safe in a Bank, and will be paid them when they demand it, they will choose to lodge it there, rather than at home, upon account of those Conveniences I mentioned before; but if either of those things be questioned, they will be their own Cashires, and not trust their Money in such a Bank.  
Therefore, as I said before, the only way to make the Bank of England capable to supply the Nation's want of real Species by their Notes and Bills, is first to ascertain to that Bank the Funds upon which they are established, and have or shall hereafter lend any Money to the Government, by the strongest Ties and Obligations of Security, that the Wisdom of the Parliament can invent, so that the generality of Men may be satisfied therewith.  
This is the first and chief Foundation to build a great and lasting Credit upon; and without this there is no possibility to effect it, for no Man will trust his Money where he believes it is not safe; and where this Consideration is wanting, no Credit can subsist.  
Another thing would be to change their Tallies upon the Deficiencies, for others that will come in this Year. Those Tallies will be good Payment for such as have supplied the Fleet and Army with Stores, Clothes, etc. by which it may be reasonably presumed they have got an extraordinary Profit; whereas the Bank hath lost by serving the Government, and took those Tallies as a Deposit till the Commissioners of the Treasury could give Money for them, as was promised and contracted for; so that the Case between the Bank and many others that have Tallies upon the Deficiencies is very different: and if the Bank be immediately restored to Credit, the remotest Tallies will soon be reduced to a moderate Discount, or esteemed equal to Money: for it is observable that some time ago Tallies upon the fourth Year's Customs were sold at 2 per Cent. Profit to the Seller, whereas by the Loss of the Bank's Credit the same Tallies are now sold at 30 per Cent. Profit to the Buyer.  
And if it be objected that the Necessities of the Government will not now permit it to make such an Exchange of Tallies as is ; I answer, The greatest Cause of all our Necessities is the want of Credit, and the restoring of that will deliver us from all our Difficulties.  
When a Pump that hath plentifully furnished us with Water gives not ito usual Supplies, we scruple not to heave in a Paleful (how scarce soever it be) to moisten the Sucker, and we quickly find it returned with an abundant Interest.  
The next Means to make the Bank able to lend great Sums, and thereby to supply the Nation's want of real Coin, is to make it the General Cashier for all Gentlemen, Merchants and Traders in and about the City of London; which must not be done by Compulsion, but by making it necessary for, and the Interest and Convenience of every Man to lodge his Money in that Bank, and keep an account with it; and when the Generality of Traders do make such use of it, the Bank will have little occasion to issue out Money, but only transfer it from one Account to another, as is now practised in the Banks of Amsterdam, Venice and Hamburgh; for if this Bank be once established and supported in their Credit by the Government, exclusive of all others, during the Term of its Continuance, and its Fund or Funds secured to the Satisfaction of the Generality of Men, than every Man will voluntarily, for his own Ease and Convenience, employ it to receive and pay his Money, and keep a Book, or Accounts, otherwise with it.  
And this cannot be hoped for when there are more Banks than one: for where the Interests are divided and separate, a Distrust, Jealousy and Envy will naturally arise to the Prejudice of each other; they will never dare to extend their Credit, for fear of a Surprise by their Competitors; each Bank will have its Friends and Employers; and the Advantage of paying and receiving of Debts without Money, by transferring Sums from one Man's Account to another, will be lost, and then Money will be as necessary to pay Debts with, as it is at this day; and if so, the main End is frustrated, which is to furnish the Kingdom with an Imaginary Coin to serve the Uses of that which is really so.  
This (besides the Experience and Example of other Countries) shows, that one Bank will be infinitely more serviceable and advantageous to this Kingdom, and beneficial to private Persons, than two or more: for according to that Observation of the late excellent, and never-to-be-forgotten Deputy-Governour, Mr. Michael Godfrey, We are under those happy Circumstances, that we cannot do good to ourselves, but by doing good to others.  
Another way to enable the Bank to supply the Kingdom's Occasions with Money, is to let several Branches of the King's Taxes and Revenues pass through it; for by that means Money will be daily coming into it, to answer People's Demands that will take their Money from thence: And though no part of the Taxes should be permitted to lie in their Hands any considerable time after they have received it; yet as that which they received some days before is to be paid into the Exchequer, other Sums will come in to pay it with; and that successively will always keep them full of Money, and enable them to pay every Man's Demand.  
What Injury this Method can do the Public I am yet to learn; and if it should happen to be prejudicial to any private Persons, who now have Benefit by the use of that Money, that Advantage must give way to the Nation's Necessity and Welfare; and where it is in the King's Breast to give it to whom he pleaseth, no Man can reasonably complain of any Injustice done him; and I know no Man, nor number of Men, that have so well deserved of His Majesty and the Kingdom as the present Bank of England hath done.  
Otherways to render the Bank capable of assisting the Nation, and cure the Evils we labour under for want of Money and Credit, are to lengthen the Term of its Continuance; to make all Foreign Bills of Exchange payable at the Bank, or at least demanded there before they can be protested; by severe Penalties to deter Persons from Forging, Counterfeiting, Altering or Razing any of their Bills or Notes; and the Officers of the Exchequer, and all Officers and Receivers of the Revenue, from deviating, delaying or obstructing the Course of Payments into the Bank.  
I say, with Submission, that if these Things were granted to the present Bank, it would immediately and infallibly recover its former Credit, and be able to serve all the Occasions of the Public, and private Persons. And I think I may be bold to affirm, That the Credit of the Nation cannot be restored by any other means in any reasonable number of Years: For we have a mighty Engine to move, and but very little Water to move it with; and if the little Water we have be divided into different Channels, and not united (as much as possible) into one, it can never stir the Engine, which is our Trade; and if that be stopped or stand still, every Man may guests what the immediate Consequence will be.  
Therefore since Credit, especially at this time, is so indispensably necessary for us, I should think the King and Parliament cannot do too much to restore it.  
Till Credit (which supplied our Occasions, as much as our real Species) be restored, the great Scarcity of Money will appear, and continue to distress us, as much as it doth at this day, and consequently high Interest will continue; for it will be impossible by any Laws to hinder Men from lending or borrowing Money above or below the natural Interest. For if I want Money, I shall find out ways to give 10 per Cent. Interest, when I cannot have it for less, although the Law forbids Men to take more than 6 per Cent. And if we either receive, or must pay a much greater Interest than our Trading Neighbours, they will unavoidably get from us all that little Trade the Nation hath now left. For no Man will send his Money to Sea, when he can make more Profit by lending it out upon Interest at home. And he that trade's with Money he hath borrowed at 10 per Cent. cannot hold Market with him that borrows his Money at 4.  
The same Inconvenience will attend all Gentlemen that want Money, either to pay their Debts, or dispose of their Children: For till a great and full Credit be restored, they cannot borrow Money upon their Lands without giving an extravagant Interest, which in a little time will eat up their Estates. And another ill Effect it will have on the Price of their Land and Houses: for no Man will buy Land or Houses, when he can make double the Advantage by lending his Money upon Interest, buying Tallies, Bank-Stock, or Bank-Bills.  
If we should have a Peace to Morrow, our present Difficulties, for want of Money or Credit, will not be thereby removed; Money will be as scarce then, as it is now; and the same Methods will be practised by the Rich, to pray upon the Necessities of others, as are at present.  
Before this War Money seemed to be very plentiful amongst us; and any Man, upon good Security, could borrow what Sum he pleased at 4 per Cent. per Annum; our Foreign Trade was generally driven to the utmost degree it was capable of. But I think (with Submission) it was not the real Plenty of Money that made Interest low, or our Trade flourish, but the great Credit the Goldsmiths than had, whereby were added as many Millions of Stock to the Nation, as we had in real Species.  
But if (even in that time of Plenty of real Species) that Credit of the Goldsmiths had been sunk, or lost by any means whatsoever, every one must grant that Interest would have greatly advanced, and our Trade had a terrible Stop and Declension: How much more must both these be affected now when that and all other Credit is lost, and our Coin reduced to one third of what it was in those days?  
The longer we defer the restoring of Credit, the more difficult, if not impossible it will be to effect it, and more especially if the present War should continue: For the longer we defer it, the poorer we shall grow; and the Art and Contrivance of jobbing our Money, and oppressing the Necessitous, by extorting from them unconscionable Gain, will improve with the Use and Practice.  
If we had no Forces abroad to draw our Money from us, yet the Vanity of our Fashions in our Apparel, Furniture, Eating and Drinking, will consume so many Foreign Commodities, as will overbalance Trade to our Prejudice, and presently sink us into Debt; to discharge which (without a great and well-managed Trade) we shall be forced to part with the little Money we have left.  
If to restore Credit the Bank of England should be engrafted upon, it must evidently prejudice the present Proprietors of that Stock, which will not only be remembered by them and their Posterity, but be reflected on by the new Subscribers as a Hardship that may also fall to their turn some time or other.  
All Men know the present Proprietors have done and suffered more for the Support of the Government than any Body of Men ever yet did; and by those very Services only they are reduced to their present unhappy Circumstances, which in reason they ought to be delivered from by those for whose sakes they were brought into them. And if that be not done, not only they, but all others by the Example of their Sufferings, will be for ever discouraged from serving the Public.  
It is true, when they were told by some certain Gentlemen of Note, and others, That except they did submit to be engrafted upon, there would be no Favour showed them, and that they could not expect to recover their Credit till the end of their Term, and till than no part of their Interest could be divided amongst the Members of the Corporation; the major part of the General Court did agree to it, some being terrified by those dreadful Stories, some to serve other Ends and Interests of their own, and others by mistaken Notions of the Thing. But this was far from a free and voluntary Consent; for no Proprietor, if he had believed the Government would have helped them, and restored their Credit (as it is easy for them to do) would ever have been induced to give his Consent to any Engrafting, because that doth unavoidably cut off all hopes of future Profits by the Bank.  
Besides, when the Members of the Bank cannot expect any Profits from it, but only the bare 8 per Cent. which is as well secured to them without a Bank, they will never trouble their Heads about it, much less let any of their Money lie there to support it; but as Money comes in, every Man will be scrambling to take away his Share; all Public-spiritedness will infallibly vanish at the remembrance of the Ingratitude shown to the old Proprietors: for no Man in his Senses can hope to deserve more than they have done, though so ill requited for all their past Services.  
The Members of the Bank have actually paid in 80 per Cent. and they have 20 per Cent. Interest and Profits more to divide, having had no Dividends for a long time. And now this 100 l. must be only esteemed equal with Tallies bought for 50 l. and those that have them in Payment for Goods, have got 40 or 50 per Cent. more of the King for their Goods, than they could have had of any Subject; but the Members of the Bank have got nothing, nor in three Years divided more than 10 per Cent. So that they, notwithstanding their Merits, will, if engrafted upon, be much more hardly dealt with than other People, and that in all Probability without doing any Service to the Public: for supposing two Millions should be subscribed into the Bank, that would only bring in 400000 l. of their Notes (which is one fifth part of the two Millions) and that Sum cannot lessen the Discount on their Notes, nor bring them to par; so the Design of Engrafting, which is to restore the Credit of the Bank, would be frustrated, and the present Proprietors injured, and yet no Man can pretend a Certainty that more, or so much will be subscribed.  
Hence it seems unadviseable to Engraft upon the Bank, when such Engrafting is so uncertain of answering the End aimed at.  
But to restore the Bank of England to Credit without Engrafting upon it, will save the Nation near 500000 l. in Interest, thus; It is proposed to Engraft five Millions upon it, and to raise the Interest of the said five Millions to 8 per Cent. which I reckon one with another is about 2 per Cent. more than is now allowed upon those Tallies, and that will in ten Years time (in which both Principal and Interest is intended to be paid off) amount to near the Sum mentioned above. Whereas by restoring the Bank's Credit without Engrafting, all that Money would be saved, and yet those Tallies for five Millions at the present Interest, would be more valuable than they will be at 8 per Cent. when turned into Bank-Stock, and consequently more advantageous and pleasing to the Owners thereof: for the restoring of a full Credit, will most certainly reduce Tallies to par with Money; but none can imagine that Bank-Stock will be sold for 100 l. when there is six Millions and 200000 l. daily at the Market.  
It is worth observing, that Tallies of 500 l. upon the Land-Tax and Aid granted this Session are sold for 400 l. which is 25 per Cent. Loss; and according to that Proportion the King must pay more for Credit abroad, and Stores, etc. at home, than if those Tallies were at par with Money. So that the 5 Millions given and voted for this Year's Service will in effect be no more than 4. And if His Majesty's Occasions want 5, he will be a Million in Debt at the Year's end, so for want of Credit the Nation must be taxed one Million more than otherwise it needed to be, which would be immediately remedied were the Bank in Credit.  
I shall conclude with this Position, That if Public Credit can by any means be restored, without prejudicing the Rights either of privare Persons, or any Public Society, it is much more eligible to do it by such, than any contrary Methods; and that it may be so accomplished, I have endeavoured to show.   

London, Printed for Andr. Bell at the Cross-keys and Bible in Cornhill. 1697.