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320 every prospect of a violent run taking place on the follow ing Monday. In this emergency, an order in council was issued on Sunday the 2Gth, prohibiting the directors from paying their notes in cash until the sense of Parliament should be taken on the subject. And after Parliament met, and the measure had been much discussed, it was agreed to continue the restriction till six months after the signature of a definitive treaty of peace. As soon as the order in council prohibiting payments in cash appeared, a meeting of the principal bankers, merchants, traders, &amp;lt;fcc., of the metropolis, was held at the Mansion-house, when a resolution was agreed to, and very numerously signed, pledging, as had been done in 1745, those present to accept, and to use every means in their power to make bank-notes be accepted, as cash in all trans actions. This resolution tended to allay the apprehensions that the restriction had excited. Parliament being in session at the time, a committee was immediately appointed to examine into tho affairs of the bank; and their report put to rest whatever doubts might have been entertained with respect to the solvency of the establishment, by showing, that at the moment when the order in council appeared, the bank was possessed of property to the amount of 15,513,690, after all claims upon it had been deducted. This suspension of cash payments being naturally followed by a withdrawal of gold from circulation, made it necessary to allow of the issue of notes of a smaller denomination than 5, and the statute of 1777 was accordingly also suspended. Much difference of opinion has existed with respect to the policy of tho restriction in 1797 ; but, considering the peculiar circumstances under which it took place, its expediency seems abundantly obvious. The run did not originate in any over-issue of bank paper, but grew entirely out of political causes. So long as the alarms of invasion continued, it was clear that no bank paper immediately convertible into gold would remain in circulation. And as the bank, though possessed of ample funds, was without the means of instantly retiring its notes, it might, but for the interference of Government, have been obliged to stop payments, an event which, had it occurred, might have produced consequences fatal to the public interests. The error of the Government did not consist in their coming to the assistance of the bank, but in continuing the restriction after the alarm of invasion had ceased and there was nothing to hinder the bank from safely reverting to specie payments. It had been generally supposed, previously to the passing of the Restriction Act, that bank-notes would not circulate unless they were immediately convertible into cash. But the event showed that this was not really the case. Though the notes of the Bank of England were not, at the passing of the Restriction Act, declared by law to be legal tender, they were rendered such in practice, by being received as cash in all payments on account of Government, and by the vast majority of individuals. For the first three years of the restriction, their issues were so moderate that they not only kept on a par with gold, but actually bore a small premium. But in 1801, 1802, and 1803, they were so much increased that they fell to a discount of from 8 to 10 percent. In 1804 they again recovered their value; and from that year to 1808, both inclusive, they were at a discount of 2i per cent. In 1809 and 1810, however, the directors appear to have embarked on a new course, and to have entirely lost sight of the principles by which their issues had previously been governed ; for the average amount of bank-notes in circulation, which had not exceeded 17 This depreciation in the value of bank paper being accompanied by a corresponding fall in the exchange attracted the attention of the public and the legislature. In consequence, the House of Commons appointed, in 1810, a committee to inquire into the subject; and having examined several witnesses, the committee in their report, which was both an able and a celebrated paper, justly ascribed the fall in the value of bank paper, as compared with gold, to its over-issue ; and recommended, in the view of correcting the existing evil and of preventing its recurrence, that within two years the bank should be obliged to resume specie payments. But this recommenda tion not being adopted, the over-issue of paper went on increasing. In 1812 it w r as at an average discount, as compared with bullion, of 20 per cent.; iu 1813, of 23 per cent; and in 1814, when the maximum of depreciation was attained, it was at 25 per cent. At the period when the restriction on cash payments took place in 1797, it is supposed that there were about 280 country banks in existence ; but so rapidly were these establishments multiplied, that they amounted to abovo 900 in 1813. The price of corn, influenced partly by the depreciation of the currency and the facility with which discounts were obtained, but more by deficient harvests and the unprecedented difficulties which the war threw in the way of importation, rose to an extraordinary height during the five years ending with 1813. But the harvest of that year being unusually productive, and the intercourse with the Continent being then also renewed, prices, influenced by both circumstances, sustained a very heavy fall in the latter part of 1813 and the beginning of 1814. And this fall having ruined a considerable number of farmers and produced a general want of confidence, such a destruction of provincial paper took place as has rarely been paralleled. In 1814, 1815, and 1816, no fewer than 240 country banks stopped payment ; and eighty-nine com missions of bankruptcy were issued against these establish ments, being at the rate of one commission against every ten and a half of the total number of banks existing in 1813. The great reduction that was thus suddenly and violently brought about in the quantity of country bank paper, by extending the field for the circulation of Bank of England paper, raised its value in 1817 nearly to a par with gold. The return to cash payments being thus facilitated, it was fixed, in 1819, by the Act 59 Geo. III. c. 78, commonly called Sir Robert Peel s Act, that they should take place in 1823. But to prevent any future over-issue, and at the same time to render the resumption as little burdensome as possible, it was enacted, in pursuance of a plan suggested by Mr Ricardo, that the banks should be obliged, during the interval from the passing of the Act till the return to specie payments, to pay its notes, if required, in bars of standard bullion of not less than sixty ounces weight. This plan was not, however, acted upon during the period allowed by law ; for, a large amount of gold having been accumulated at the bank, the directors preferred recom mencing specie payments on the 1st of May 1821. The fluctuations, referred to above, in the value of paper were exceedingly injurious. From 1809 to 1815, the creditors of every antecedent contract, land-holders whose estates had been let on lease, stockholders and annuitants of every description all, in short, who could not raise the nominal amount of their claims or incomes proportionally to the fall in the value of money, were to that extent losers. The injustice that would have been done to the creditors of the state and of individuals, who had made their loans