The Peel Bank Act of 18 
887 
banking and under various degrees of state control and monop¬ 
oly. The banks of necessity follow and partake of the general 
spirit which* pervades business. * 1 Comparative study indicates 
this to be the correct conception rather than that in the defects 
of particular banking systems are to be found the sources of in¬ 
dustrial convulsions. A deeper cause must be sought. Strong 
and significant indications of it are to be found in the lack of 
general moral integrity and solidity in the spirit of a people. 2 
III. The Peel Bank Act of 18^. 
The period from 1797 to 1821 has been called, in England, 
“The Bank Restriction Period” because, during that time, the 
Bank of England was relieved, by government authority, from 
the necessity of redeeming in coin its issue of notes. The causes 
for the restriction of specie payments in 1797 seem to have been 
mainly political. 3 The war with France was again renewed at 
that time, and with it came new demands of the government 
upon the bank. 4 In 1795 the government had forced the bank 
to an increased issue of notes. 5 Upon receipt of the news of 
the French expedition to Ireland the reserve fell rapidly, 
amounting in February, 1797, to only £1,186,170. Following 
upon the restriction, the government authorized an examination 
of the condition of the bank, and a meeting of London merchants 
declared themselves willing to receive its notes at par to any re¬ 
quired amount. When this order was issued it was intended to 
A. Wagner in Rentzsch“HandwOrterbuch,” p.534; also “Peel’schen Bank- 
acte,” p. 261. Juglar “Crises Commerciales,” etc., 1st ed., Preface, p. 9. 
1 Leon Smith, op. cit., p. 161. 
2 Cf. Schaffle, op. cit., pp. 375-376. The quotation chosen by Adolph 
Wagner as the motto of his book, “Lehre von den Banken,” is: “Free 
trade in banking is not synonymous with free trade in swindling.” 
(Probably adopted as the negative of a sentence occurring in Tooke, op. 
cit., vol. 3, p. 206.) The two things compared are by no means co-ex- 
tensive, and the latter shows itself under a bewildering multitude of 
different forms. 
3 Ricardo, “ Prin. of Pol. Econ.,” p. 289. (London, 1881.) 
4 Sidney Dean, “ Hist, of Banks and Banking,” p. 73. 
6 Max Wirth, “ Handbuch des Bankwesens,” pp. 246-248, being Bd. Ill 
of “Grundzuge.” 
26 
