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The banks were the first to start the idea of paper money, and the very invention of banks has been the fruit of successive circumstances and observations. The ruin of the two most famous deposit banks in Europe shows at what price, in modern times, that power of credit was bought and how many pitfalls are connected even with its most moderate use. The banks issued to the trade their notes as perfectly equal in value to specie, because in effect they could be converted to specie at the will of each depositor. The banks drew interest, not on the specie they really paid out, but on the specie every note holder believed to command at any moment.

The export of specie from one country to another is almost always prohibited by suspicious governments. This prohibition, almost universal in Europe during the Middle Ages, hastened the invention of bills of exchange, which have developed into some kind of money for world trade, and whose use would have been only a little less profitable, if the transport of specie would not have been forbidden. Bills, being purchased and settled in specie, performing the service of money, and appearing to have no other existence than through the money that settles them, have often been considered as equal in quantity to the money they replace.

One half of Europe, before the reign of Charles V, which had already reached a high degree of prosperity, which was daily increasing its agricultural riches, its manufactories and its trade, was governed by men who, in private life, had attended to the study of economy. They had learned what is suitable in that of states and who, governing free communities to which they were responsible, guided their administrations, not according to their own ambition, but according to the interest of all. Charles V, his rival Francis I and Henry VIII, had engaged in expenses beyond their incomes.