lefs moderate: the company agreed to pay 1,110,000l. to be difpofed of by parliament, without allowance of intereft, or repayment of principal; and to circulate a million in exchequer bills, undemandable for two years, at only three per cent. intereft, though exchequer bills bearing four per cent. were then at a discount. In 1781, the charter was again prolonged by the addition of twenty-seven years to the former term, or till August, 1812; for this indulgence, the government received as an advantage, the circulation of two millions of exchequer bills: not to be demanded for two years, and bearing no greater intereft than three per cent. The last prolongation was confirm ed by an act paffed in 1800. Though the charter of the bank had several years to run, yet it was thought expedient to renew it at fo early a period, with a view of ftrengthening the credit of the bank, and enabling it to give every poffible affiftance to government. The bank became bound to advance three millions for the fervice of the year 1800, on exchequer bills, payable without intereft, out of the fupplies to be granted for the year 1806, in confideration of which, the term of their charter was continued till the end of twelve months notice, after the first of August, 1833.

UTILITY OF THE BANK. The benefits derived by the public from the existence of the bank, are not however to be confidered as limited to the receipt of the monies already mentioned; the taking up of exchequer bills and other government fecurities, when the market was overstocked, was a fervice of confiderable importance, and, on great occafions, the bank has, by its capital and credit, oppofed an effectual barrier against the fears and alarms which would have proved most ruinous to the nation. Thus in 1722, when the failure of the South Sea scheme had produced fuch dangerous effects on public credit, the bank contributed to allay the general inquietude, by purchaf ing four millions of the South Sea capital; and their aid and fubfcription have ever been ready in forwarding, so far as was proper, all public fpirited and patriotic undertakings.

ITS DISASTERS. Nor has the profperity of the bank been without fome interruption, though the foundation of its credit has ever been unimpaired. The difafters attending the first years of its establishment have been mentioned. In November, 1700, the general terror occafioned by the claim which Lewis XIV., advanced to the crown of Spain in favour of his grandfon, materially affected, for a time, the credit of the bank; and in 1704, the value of all fecurities was fo much reduced, that they were again obliged to iffue, to a large amount, fealed notes bearing intereft. In 1708, the fear of an invafion of Scotland in fupport of the Pretender, occafioned what is called a run on

the

the bank, but the credit of the corporation being now confider ed infeparably connected with that of the exchequer, the lord treafurer, Godolphin, fignified to the directors, that the queen' would, for fix months, allow an intereft of fix per cent. on their sealed bills, which, till then, bore only three per cent. Moreover, his lordship, and the dukes of Marlborough, Newcastle, and Somerset, and fundry other lords, offered to advance to the bank confiderable fums of money: by which encouragement, and their making a call of twenty per cent. on their capital, the bank was enabled to weather that ftorm, and to preferve its credit. In 1711, the change of the miniftry occafioned a fimilar run, but its bad effects were parried by the address and contrivance of the minifter, in diverting the public attention to other objects. The apprehenfion of queen Anne's death, in 1714, occafioned again a depreciation of national fecurities, and a run on the bank, but the alarm speedily fubfided, and the confidence of the country was restored; but in 1745, the crifis was more menacing. In that year, in confequence of the alarm raised in the metropolis by the progrefs of the Pretender's fon, there was a great run on the bank in the month of September. The directors, to make their cafh hold out as long as poffible, paidin filver, and chiefly in fixpences; an expedient which could not have availed them long. An infinitely more effectual, as well as more honourable relief, was adminiftered by a meeting of merchants, bankers, and traders, on the 26th of that month, when thofe gentlemen drew up a paper, declaring their refolution to fupport the credit of the bank by receiving their notes in all payments, and ufing their utmoft endeavours to pay them away to all perfons receiving monies from them. The refolution was foon figned by above eleven hundred individuals, and had the happy effect of quieting apprehenfion, reftoring confidence, and putting an immediate end to the run upon the bank. From this period for fifty years, the bank continued to enjoy uninterrupted fuccefs and unlimited confidence; but in 1795, they found it neceflary, from the nature of circumftances in the commercial world, to publish a refolution for limiting their accommodations by difcount, though in fact, it is faid, they did not, in the enfuing year, discount to a smaller amount than in that which preceded.

All these were however of inconfiderable importance com pared with the great stoppage which occurred in 1797, an event which demonftrated, that, even in a commercial country, anxioufly alive to its pecuniary interefts, it is eafy for a strong and popular administration to quiet apprehenfion, and restore confidence, amid circumftances the most unpromifing, by the ufe

- of

of temperate exertions enforced by convincing arguments, and fupported by facts.

The great and continued drains of bullion, in confequence of the enormously expenfive operations of the war, the loans to. the emperor of Germany, and other fubfidies to foreign princes, and alfo the large fums payable for cargoes and freights of neu tral fhips taken, which the foreign owners required to be paid. in bullion, had raised the price of gold (8th of October, 1795,) to four guineas per ounce and our gold coin being only 31. 175. 10ld. per ounce, it was evident that the current money of this country, confifting almoft wholly of gold, would be carried abroad to a very alarming amount. Even fince De-. cember 1794, the directors had repeatedly expreffed to the chancellor of the exchequer, their uneafinefs on account of the magnitude of the fums drawn from the bank for the fervice of government, and anxiously required payment, or at least a confiderable reduction of the debt. They even resolved to limit their advances on treafury bills to the fum of 500,000/.; and requested Mr. Pitt to make his arrangements fo as not to have. occafion to draw on them for any fum beyond that limitation.. And at laft they acquainted him (30th of July, 1795,) that they were determined to give orders to their cafhiers to refufe, payment of any treasury bills, which would carry the advance beyond that amount. Nevertheless the chancellor of the ex-. chequer obtained further advances from them, which were granted with extreme reluctance on their part, on his preffing. folicitations, and statements that ferious embarrafiments would arife to the public fervice if refufed.

It would be tedious to enumerate all the applications of the governors of the bank to the prime minifter, urging a speedy diminution of the debt, and deprecating further demands; fuffice it to fay, that on the 10th of February, 1797, the govern-, ment was indebted to the bank, according to a statement delivered to Mr. Pitt, as follows:

Arrears of advance on land and malt-taxes, 1794

ditto

ditto

1795

491,000

The directors of the bank reprefented to the minifter, that, if the loan of 1,500,000l. to be raifed in this country for IreLand, which was then in contemplation, fhould proceed, the greatest part of it must be remitted in hard cafh, which would bring ruin on the bank, and probably compel them to fhut their doors; that, at any rate, they muft diminish their advances to the treafury, and leffen the customary accommodation to the merchants in the way of discount.

About this time there was much talk of an invasion from France and it was fuppofed that many people in all parts of the country were defirous of fecuring as much as poffible of their property in gold coin in their own poffeffion. Certain it is, that very heavy demands were made on the country banks, and that two in Newcastle were obliged to stop paying int cafh. The country banks were thereupon obliged to make large demands for money on the bankers in London, who were their correfpondents, which confequently compelled them to drain very large fums in cafh from the bank. This run had been progreffively increafing; but particularly in the week beginning with Monday the 20th of February, it exceeded that of any foregoing week; and the demands on the Friday, and Saturday, were larger than the four preceding days taken together.

On Friday (24th) the committee of the whole court of direc tors, alarmed at the rapid diminution of the cash in their coffers, defired the deputy-governor, and Mr. Bofanquet, to wait on Mr. Pitt, to reprefent to him the dreadful drain of their fpecie, and to afk him, how far he thought the bank might go on paying cash, and when he would think it neceffary to interfere, before their money was fo reduced, as might be detrimental to the immediate fervice of the state?

In this crifis, the king was requested to come to town to affift at a meeting of the privy council; and on Sunday (26th) a council was accordingly held at St. James's, the refult of which, and of another meeting immediately after it in Downing Street, between the members of the adminiftration, and the governor, deputy-governor, Mr. Thornton, Mr. Bofanquet, and other directors of the bank, after a warm conference, was, an order of privy council declaring it indifpenfably neceffary for the public fervice, that the directors of the bank of England fhould forbear iffuing any cafh in payment, until the fenfe of parliament could be taken on that fubject, and the proper meafures adopted for maintaining the means of circulation, and fupporting the public and commercial credit of the kingdom.

The governors and directors immediately published the or

der of council, with an advertisement of their own, declaring that their general concerns were in an affluent and flourishing fituation, and that they should continue their ufual discount for the accommodation of the commercial intereft, paying the amount in bank notes; and the dividend warrants would be

a

paid in the fame manner. The actual arrival of an event, which, by all perfons who had ever contemplated a probability of its happening, had been dreaded as the death-blow to the commercial profperity of the country, produced confiderable alarm, but alarm, but it was far fhort of what might have been expected. The principal merchants and bankers immediately met at the Manfion House, the Lord Mayor prefiding, and unanimously adopted and subscribed a refolution that they would not refuse to receive bank notes for any sum of money to be paid to them; and would use the utmost endeavours to make all their payments in the fame manner. In a few days, this refolution was fubfcribed by above three thousand principal merchants, bankers, and traders; on the 28th of February a paper, nearly fimilar, was figned and published by the lords of the privy council; and immediately tranfactions of every kind went on, as if nothing had happened. A number of papers tending to account for the scarcity of money were prefented to parliament, from which, and the investigation to which they gave rife, it fully appeared, that the affairs of the bank were, by no means, in a fituation to give any real cause of alarm to their creditors, and that the company were fully able to make good all demands of every kind. It was made evident, that, after deducting all claims against them, they had a clear balance of property to the amount of 15,513,690l. and confequently, as fo large a capital could not be forced into cash without great lofs, it was the interest of all proprietors, as well as of all who regarded the welfare of the country, to unite in fupport of the establishment by which alone it could be rendered valuable.

ISSUE OF SMALL NOTES AND DOLLARS. In a few days after the stoppage of iffuing cash from the bank, the directors began to iffue notes for one pound and two pounds, which have continued ever fince in general currency. As a further substitute for British coinage they circulated Spanish dollars, with a miniature impreffion of his Britannic Majefty's head ftamped upon them, at four fhillings and nine-pence. They continued in circulation till the 31st of October, 1797, during which time a great many dollars had been iffued by unprincipled individuals with counterfeited ftamps. The King's head on the dollar was fo very small, not larger in circumference than a pear of moderate fize, that to counterfeit it was a very easy VOL. II. operation.

*M