It may be useful here to direct our attention to the degree of increase which had taken place in the stock of bank of England notes. In regard to small notes (I/. and 21.), nearly three years elapsed after the sus pension, before their amount rose to two millions—a cir cumstance to be attributed to the favourable exchange of 1797, 1798, and part of 1799. Bat whenever the ex change underwent the serious revolution which we hase mentioned, our began to lint] their way abroad; so that, by the end of 1803, our smali-note circula tion had risen to four millions. The augmentation of our larger notes had been less considerable, king in the cod of 181', only two millions and a half above the amount of the ordinary currency the sion. WilCI1 We consider, that the notes, however profitable to the bank, formed rah( r substitution for guineas than an addition to the mass of our circulating medium, the remaining stint (two and a half millions) appears a moderate augmentation fur tech years of pecuniary difficulty. To this, Lowe.% cc, is to be added the extended issues of country banks, the amtun• of which had been, for some time, in a state t f pi ogre -• sive increase, in consequence of the t id afforded tht nn by the bank of England. what aid was pi cult dirt r t, in the shape of discounts to the London agents of t con try banks, and to a much greater degree codateral, by the general diffusion of confidence in paper money. Tc the two and a half millions of increase in bank of Ei. land notes, is therefore to be made an addition, probalay larger, for the extension of country bank paper ; and i. we, moreover, make allowance for a cause of more real than apparent efficacy, we mean those improvements it banking which make the same stock of paper go a mud. greater way, we shall be disposed to regard the total augmentation of our circulating medium, from 1797 t 1803, as very considerable, and as affording an adequate reason fmr the partial depreciation which had now taken place.
If we divide the history of the bank, since its snspen sion, into epochs, the years 1797 and 1793 may be term ed a season of tranquillity, w bile the following years, till the conclusion of peace, must he pronounced to come under a less satisfactory description. The renew al of war may be considered a third era ; an era in which the advance of national power and prosperity was retard ed by enormous burdens, but in which there was, fur several years, little direct pressure on our money sys tem. This happy exemption was owing to a doni cause;—relief front continental subsidies, and front tl • necessity of large importations of foreign corn. The har vest of 1803 was abundant ; that of 18 )-1, althongh par daily deficient, led to nothing in the shape of scarcity . and that of 1805, 1806, and 1807, were not, taken all to gether, below a fair average. In regard to subsidies, t. c were long unable to stir the continent to arms; aid , in the end of 1805, we had succeeded in our LA ourite plan of a coalition, the rapid success of Bonaparte sated us, as before, front a prolongation of remittances, at the moment (December) when their magnitude had com pletely overset the exchange. Our subsequent aid to Prussia and Russia was of an extent to pre ent a ii e. rather than to occasion a fall of exchange ; and a gradual rerovery began to take place after the peace of Tilsit. The first five years of the war, therefore, were a period of financial stability ; the mercantile world, if not pros perous, was exempt front any great or general disaster ; and the bank, of course, front any importunate demands for extended issue. The directors had the prudence to
keep their circulation steadily within the limit we have mentioned ; and the depreciation of their paper, though continuing always at nearly three per cent. was unper ceived by the public. Gold was not lower than four pounds an ounce ; but it was little heard of in the market, the bank having become, in a manner, the exclusive pur chasers.
We are now to enter on a fourth period in the history of the restriction act, a period altogether different from the tranquil years that preceded it. Until the end of 1807, we had conducted our military operations with a careful reference to our means, and had been hardly led into any kind of warfare calculated to expose to hazard the peculiar nature of our currency. But, at this time, all considerations of a calmer kind gave way to the call for vigour, and the stoppage of neutral trade, a measure long called for by some of the London mercoants, and long resisted by government, received the sanction of the cabinet. The dull sale of our East India merchandise, the nnprofitableness of ship-owning, and the annual sink ing of West India property,—misforttmes resulting in part from the defects of our own policy, and more from the pressure of long continued warfare,--were ascribed, by the majority of the suffering parties, to the successful competition of the Americans. Mercantile men, accus tomed to form their opinions from first impressions, can hardly be expected to take into view the remote conse quences of the measures for which they contend. Ardent in the prosecution of the war, and unconscious that its accumulating burdens sap the foundations of their pros perity, they are much more likely to attribute their disap pointments to the intrusive interference of foreigners, than to errors at home. Commercial jealousies have always been keen, and the Americans seem likely to become in our eyes what the Dutch were to our ancestors in the days of Cromwell. Her merchants seem to have per suaded government, that if neutral trade was stopped, the continent must draw its supplies from England ; and that we should succeed in smuggling them in defiance of Bonaparte's prohibitory decrees. Hence, among other arrangements, the capture of Heligoland, as a station for contraband trade with the north of Germany. While her merchants calculated that these measures would re lieve them of the superabundance of their produce, mi nisters, disposed to join in this expectation, were perhaps more directly actuated by the popularity attendant on a grand demonstration of energy against the enemy. Such was the our orders in council in November 1807. By a singular coincidence, it happened that, shortly before, we had determined to consider the in tercourse of America as injurious to us, Bonaparte had adopted an opposite conclusion ; and, under the invites tle.t all maritime commerce tolerated on the con tinent, whether through Americans or others, must turn to the advantage of the British," had intimated to the inihi.ac• of rite 'United States at Paris his intention to permit no longer the neutrality of his country. Ac cordingly, his It( jni.,dr r to our orders bespoke no dispo ion to evade tin it operation, but an impatience to drive ‘inerlea to extremity with us, by denouncing yen , I ante , any of her ships which might submit to ow• t,c s regulations. From these anrry denunciations on the part of the tvt,o great powers of Europe, joined to einIctr.;o adopted by congress (221 Dt centh•r), en a complete cessation of into rcou rat between Ame rica and the continent of Europe.