364 
bills in theirs to be discounted for him. By 
this intermediate agency, the London, bank- 
ers were capable of extending the loans of 
the bank to their country connections, and 
of giving them that support which had been 
refused to their direct application: they 
thus secured to themselves the power of 
offering a certain quantity of bank notes, or 
specie, upon any sudden aspersion on their 
credit, 
«© In the year 1797, another alarm gave rise 
to another suspicion of their stability. But 
by the measures which they had taken, the 
ress was in reality directed against the 
ine of England instead of themselves. Im- 
mediately that a run was made upon them, a 
drain was made upon the bank for specie 
through their London connections, and vast 
sums were remitted for their support. In 
proportion as the alarm became prevalent, 
and paper became contracted, specie was the 
more and more demanded to supply the va- 
cuum. The bank, apprehensive of being ex- 
hausted of its deposits, pursued its accus- 
tomed policy, and reduced the amount of its 
notes. By this diminution it augmented, in 
a greater degree, the general distress, without 
. any relief to itself, as the smallest quantity of 
paper which it continues permanently in cir- 
culation would be sufficient, by frequent 
exchanges, to draw out any given sum of 
money, and eventually to drain it of its 
stores, As this policy, therefore, had no 
other effect than to aggravate the evil which 
it was intended to remedy; and as, by an 
inereased demand for specie, great danger 
existed of a total privation of its deposits, it 
was reduced to the necessity of applying to 
government for support, and suspending its 
cash payments. But no blame is imputable 
to the directors ;_ they found their house in- 
volved in difliculties by no imprudence of 
their own, and adopted the line of con- 
duct which existing circumstances, in their 
opinion, demanded. No doubt whatever 
ean be entertained, but that the order of 
eouncil was necessary at the time to prevent 
worse consequences.” 
After some pages more of similar rea- 
soning the author thus continues 
«<Tn order, therefore, to obviate the danger 
which threatens the bank of I:ngland upon 
a return of cash payments, and to prevent 
the probable recurrence of the calamities of 
1798 and 1797, it appears to me absolutely 
necessary, that the circulation of country 
notes should be prohibited.” 
The facts adduced in this whole pas- 
face aré most unfairly related. There 
were great failures at the beginning of 
the anti-jacobin war. Whence did they 
arise ? A war always throws a great mass 
of capital into a new direction; there 
HISTORY, POLITICS, 
AND STATISTICS. 
n 
5 
isa sudden progressive absorption for the 
public service, and a sudden speculative 
investiture in naval stores and other new 
objects of demand; of course many ap- 
plications for payments are made at 
once pressingly and peremptorily in the 
commercial world. Whoever finds it 
difficult to be punctual becomes a mark- 
ed man; whoever is really insolvent is 
at such times compelled to the acknow- 
ledgment. The war of 1792, terminated 
a commercial treaty which had intro- 
duced British manufactures to every 
corner of France: of course the inter- 
cepted masses of capital much belonged 
to merchants trading with ‘the French 
ports, and to: manufacturers who directly 
supplied the store-keepers of France, 
Manufacturers for the foreign market 
are usually principal creditors of the 
country-bankers: they can circulate 
much paper in the payment of their de- 
pendents, where they make it an object ; 
and a banker willingly proportions the 
credit given, to the consumption of his 
paper. The country-bankers therefore 
were much inconvenienced by the di- 
minished command of capital among the 
manufacturers, and endeavoured to get 
advances of their regular correspondents 
—the London bankers. On a system of 
open banking, this could easily have 
been accomplished ; the houses im credit 
would have issued a greater quantity of 
notes, and have discounted the circulae 
ble securities of their provincial friends. 
But the bank of England, possessing in 
London a monopoly of discount, and 
wishing to employ its own capital ra- 
ther in government securities than in 
private accommodation, refused to dis- 
count for the London bankers with the 
increased facility, which the provincial 
demand for capital required. The bank 
of England even narrowed its discounts 
at that time; and thus inflicted, m rea- 
lity, much of the commercial embarrass- 
ment and misfortune of 1793. During 
the subsequent difficulties of the West 
India merchants, similar evils arose from 
the monopoly-bank, and government 
had to advance the defective capital in a 
manner very favourable to the corrup- 
tion of mercantile political opinion ;_ but 
very dangerous to the property of the 
nation, very hostile to the inculcation of 
prudence, and very needless and inex~ 
pedient on a system of open banking. 
