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A battle had raged
for decades between the King and the merchants, for control over England's
money system. The arrival of William III of Orange in 1688 with his "glorious
revolution" heavily financed by merchants tipped the scales in favour
for the often spoken wish for an independant credit institute.
Following
the suggestion by William Patterson, the Bank of England was founded in
1694.
The Bank of England printed "Goldsmithnotes" as promissory notes
from English gold smiths for account deposits. The clause "(I) promise
to pay the bearer on demand the sum of (...) pounds" (i.e. in gold)
originally meant that they could be exchanged for gold, although in practice
this was not always possible.
The state received
a loan in exchange for the right to print banknotes. In time the Bank
of England developed into the most influential bank of issue bank in the
world.
One
year after the founding of the Bank of England, the Bank of Scotland was
initiated. It held the bank note monopoly for Scotland until 1717.
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Also in Norway,
which at the time was a Danish province, in1695 the businessman Thør Møhlen,
circulated banknotes (without interest) with the approval of the government.
The notes had 5 wax seals. Unfortunately the population didn't find them
acceptable and brought them immediately to the bank to cash them in. As
a result, Thør Møhlen came into financial difficulty.
It wasn't
until 1713 that Denmark began circulating paper money during the war with
Northern Ireland. It was also served as a form of emergency
coinage and emergency
money.
France
also began printing paper money in the year 1703 under Luis XIV. Because
of uncertainties connected with paper money, other states waited until
the late 19th century.
One
problem with paper money was the paper itself. Several companies experimented
with the processing of special
paper in the 18th and 19th century.
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