676 B A 
Paper, as a circulating medium, is more than convenient; 
for in thefe enlightened times it is neceffary, and even in- 
difpenfable. 1 lie difficulty arifes from the confequences 
which refult from the. two extremes : in the cafe of too 
great an excefs, depreciation and diftrefs will inevitably 
follow; but, it too much Curtailed, the exertion and in- 
du(try of the country is chilled or pallied, and its growing 
profperity is thereby prevented. The bank of England, 
from their central polition, are mod fortunately placed to 
form a correct judgment on this fubjecl, and the amount 
of their notes in circulation will conftitute a perfect baro¬ 
meter, refulting from long experience and practice. 
The- tranquillity, confidence, and general profperity, 
which fucceeded the diftrefs in 1793, continued through 
the years 1794, 1795, and part of 1796; but money again 
became fcarce towards the end of 1796, and the bank of 
England ftopped payment in the beginning of 1797! This 
very Hidden tranfition from plenty to fcarcity, from fcar- 
city to diftrefs, and from plenty to diftrefs again, could 
arife from no common caufe. Indeed all convulfions in 
the circulation and commerce of every country mud ori¬ 
ginate in the operations of the government, or in the mif- 
taken views and erroneous meafures of thofe pofTefling the 
power of influencing credit and circulation; for they are 
not otherwife fufceptible of convullion ; and, if left to 
themfelv.es, they will find their own level, and flow in one 
uniform ftream. 
The fcarcity of guineas which took place towards the 
end of 1796, feems to have been in confequence of the 
increafed amount of foreign fubfidies, and remittances to 
the continent for the public account: thefe had increafed 
beyond the capacity of the current circulating paper to 
lupply, and therefore could not be melted down in the 
courfe of the year, by means of the balance of trade, but 
mud be liquidated with gold and filver alone. At fird, 
and indeed for many months, the bank acted in fuch a man¬ 
ner as to fatisfy the public, and to keep the country quiet; 
but the demand for guineas mud have been enormous: 
this will ealily be underftood by a calculation of the pro¬ 
fit to be obtained on exporting them to Hamburgh, in the 
months of January, February, and March, 1796. The 
price of gold abroad had advanced to 99! per ducat, which 
for 100 guineas makes 1402-12 marks banco, and at the 
average exchange of thofe months 32-3 is ■ /T 15 9 9 
Deduct the colt as before - - - 106 13 o 
Profit - - - 8 16 9 
But, as this was the higheft price, it may be proper to 
quote the average of each month in 1796 : 
Exchange 
in London 
Price of Gold 
at Hamburgh 
Produces an 
Exchange 
Profit 
In January 
31-8 
97 s 
34-2 
74 
February 
32-8 
99 l 
34-10 
64 
March 
31-11 
99 
34-84 
8§ 
With fuch documents in the poffeflion of every foreign 
merchant, it is eafy to fee that there mult have exified 
fome forced unufual operation, by which the country was 
drained of its bullion, and of its coin, beyond a poflibi- 
lity of continuing for any length of time; and this drain 
was in a great degree the Imperial loan, aided by fome 
other collateral circumftances. As tke public attention 
was particularly drawn to the Imperial loan at the time, 
and as it formed the prominent feature in the remonftran- 
ees from the bank, it has been confi.dered as the foie caufe 
of the general embarrafl'ment. But it was the magnitude 
of the fum, not the defcription of fervice, which created 
the difficulty. It mull be indifferent to the country, if 
bullion is exported , to what fervice it (hall be applied ; but 
it is of infinite importance, w hether the magnitude of the 
flint fhat! exceed, or fall fliort, of the balance of trade. 
Whether money fo exported lliall be applied to the pay¬ 
ment of the Britifh troops in Germany, for the foreign 
expenditure of fleets in the Mediterranean or L'lbon, or 
w hether it Hull be for an Imperial loan, or foreign fubii- 
N K. 
dies, is exactly the fame to the country; for, vvhilft the 
balance of trade is favourable, the money muff return. 
It mult not however be underftood, that foreign loans, 
or foreign expenditures, are fubjedts of indifference to the 
country ; they are no doubt clear unequivocal lofles, which 
the calamity of war lias invariably produced. It is there¬ 
fore moft ardently to be vvilhed, that there Ihoiild be no 
occafion for the exportation of bullion’; or, in other words, 
that there ftiould be perpetual peace; but, during war, 
one of the moft effential fervices which commerce can ren¬ 
der for the aid and affiftan.ee of the public, -is to "furnilh, 
from that treafure which the balance of trade has contri¬ 
buted to accumulate during peace, the gold and diver 
which the exertions and exigencies of the ftate fhall re¬ 
quire for their operations abroad during the war. It is by 
Inch means alone, that the political and commercial pow¬ 
ers have formed a combination of ftrength, both for offen- 
five and defenlive operations, which has aftonilhed all Eu¬ 
rope ; although, from the profufe manner in which they 
have been applied, they have not always produced their 
proper effect. It was, therefore, not the nature or defcrip¬ 
tion of fervice, which rendered the Imperial loan fo inju¬ 
rious; but fo many drains on the bullion of the countrv 
exifted at the time, that the addition of fuch an enormous 
lum produced the moft pernicious confequences. The 
alarm of the bank, 'and their remonftrances, were well 
founded ; and their fttuation, if fuch operations had con¬ 
tinued, was pregnant with real danger. They had ftrug- 
gled, however, through the year 1796, and would certain¬ 
ly have furmounted every difficulty, as any further impe¬ 
rial loan had been abandoned, and the foreign exchange 
was turning in favour of the country, when an event hap¬ 
pened which was decifive on the fate of the bank. This 
was the general rumour of a French invafioii, which was 
confirmed in the minds of many by the landing of a hand¬ 
ful of French troops in Wales. This occafioned a panic, 
which gave rife to an immediate demand for money, to 
which neither gold nor filver in bullionjjould be applied, 
as nothing would be accepted but the circulating coin of 
the country. Perfons of almoft every defcription caught 
the alarm : tradefmen, mechanics, and particularly wo¬ 
men and farmers, all wanted guineas, for the lole purpofe 
of hoarding. In 1793, when confidence in the notes of 
country banks, and in every other defcription of paper, had 
vanilhed, thole of the bank of England circulated with 
the utmoft freedom, and without the flighteft hefitation or 
doubt. But on this occafion bank notes at firft were con- 
fidered almoft as wafte paper, fo that it was impoflible to 
fatisfy the timid and ignorant with any other payment but 
guineas. 
If this event had happened before the bank had been 
drained for foreign fervices, it might have produced an 
eftedt only, which they could have faced by means of their 
ufual depofits, under a perfuafion that the caufe would 
Toon be removed, on finding that the attempt on the part 
of the French was not fupported. But it came at a mo¬ 
ment when their ftock of guineas was already too low, and 
rendered the meafure to which they adverted indifpenfa- 
ble. The demand for guineas ceafed, no doubt; not be- 
caufe the defire of obtaining them had abated, but be- 
caufe the bankers and merchants united firmly to fupport 
the bank in their refufal to illiie guineas, and to accept of 
their notes inftead, as a circulating medium. The caufe 
of the calamity originated in thofe drains which had pre- 
vioufiy exifted, to lupply the foreign loans, and foreign 
.fervices, on behalf of government, and which had never 
been properly combined with the capacity which the coun¬ 
try pofleffed to fupply them ; but what produced the crijis 
was, the landing of the French troops. The timidity 
which appeared in many very fenfible men, on that occa¬ 
fion, was' furprifing. Yet they nuift have known the im- 
pofiibility of obtaining a fum in guineas, in any degree 
proportionable to their property ; as every perfon had an 
equal right to be fupplied, and would hoard as well as 
themfelves. Whatever fum they could obtain (as pro¬ 
perty^ 
