\l'r help thinking, although the remark has no where been made, that had the bank suspension no taken place in the spring of 1797, it would, in all pro bability, have been unnecessary down to the present clay When the credit of an establishment stands so high, t..ere is no hazard of a run for cash for the purposes of inland trade ; the demand can be only for foreign use. Now it so happened, that our great continental subsidies came to a close in 1797, and though thrice renewed since that time, they on no occasion lasted so long as to create em barrassment to the bank. Had we ventured, without the aid of the restriction act, to form the coalition of 1799, the cash, which was at that time abundant in the bank coffers, would have supplied the chief part of the subsi dies. This point once adjusted, it is scarcely probable that any considerations arising out of the want of foreign coin, would have induced ministry to resort to the unpre cedented and alarming measure of suspending cash pay-. ments. If we suppose that critical interval got over, we shall find no combination of circumstances of more recent date, likely to necessitate the adoption of the mea sure. The war in Portugal, like the war in Flanders of 1793 and 1794, is in a great measure defrayed by the supply of stores from home ; the prohibitory decrees of Bonaparte may prevent the recovery of our specie, but could hardly have drained it from us ; and in regard to the American continental intercourse, the bank directors would not have failed to oppose the clamour of the ship owners, and stay the hand of ministers, had the liability to cash payments been in force. It is true that the alarm of invasion was great during the two first years of the present war, but to those who apprehend danger to the bank from such a cause, we would summit two impor tant considerations ; first, that those alarms are, in great part, the act of our own government, with the design of keeping us prepared ; for, in the beginning of 1797, at the very time when ministers were loudly promulgating danger, Mr Pitt, on finding that it had produced a drain of cash, made this remarkable admissioo, in his confe rence with the bank directors (21st February,) that " the alarm was now become much more general than he could think necessary."* The. next point is, that the dread of invasion need not, unless accontlianied by an un favourable exchange, deter the bank of England from in creasing the amount of their circulation. Notes of such high credit would continue to obtain currency for com mercial as well as financial purposes, and we have the au thority of the Bullion Report (p. 27.) for the inference, that, had the hank boldly increased their issues in Fe bruary 1797, there would have been little danger of a stoppage—an additional proof how near we were to an exemption from that mortifying alternative.
Falk]) in some degree, as we must admit our paper money to be, a retrospect of its history, and a compari son with that of our neighbours, will not fail to suggest to us several flattering considerations. In looking to the example of the French republic, and, more recently to those of Austria, Russia, and Sweden, we find their pa per currencies doomed, as soon as government inter feres, to rapid depreciation. Among ns, ten years elapse
after so great an irregularity as the stoppage of cash payments, without any farther degradation than three per cent. The source of this comparative superiority will be found in our long established habits of industry, and that promptitude and regularity in our transactions which are its happy consequences. But the more immediate causes have been the productiveness of our ta:“•s, and an ind•penden, e of government, almost complete, on the part of the bank. Without denying the necessity ur tial improvement in the constitution of that corporation, it ma) be justly said, that they IleN (1* a cote into circulation, and that the principal additions made to their paper since the suspension, have borne less the character of ;oluntary emissions than of advances fur the relief of trade. Open as sonic parts of their conduct are to cen sure, we may safely say, that, with the exception of I fol land in its better days, no country in Europe would hate alfinaled an example of a delicate trust discharged 111111 such a share of honour and moderation.
In comparing the price of bullion in our market with the state of our continental exchange, since the com menc•ment of the present depreciation, we find a dif ference often of eight per cent.; that is, while bullion is fifteen per cent. above coinage value, the exchange with I I ainburgh or I Iolland may be so much as twenty-five per cent. against us. This difference appears to represent the expellee and hazard on the conveyance of specie to the continent. In adverting to the parliamentary trans actions relative to bank notes, we lind that the act of 1797 went no farther suspending the arrest of the person and goods of a debtor after lie had made an offer of payment in bank notes ; and even that the act of July 1811, founded on Lord Stanhope's bill, did not go so far as to make bank notes a legal tender, its principal pro visions being to impose a penalty on buying or selling them at a discount.
If we refer the practical results of trade to the prin ciples laid down by out illustrious countryman, Dr Smith, we shall generally find reason to admire the soundness of his conclusions. Though partial to the use of paper money under due restrictions, he is yet aware of its com parative instability, and gives his readers cause to be prepared for the recurrence of such embarrassments as those of 1793 and 1795. In regard to the country banks, he apprehends no danger from their multiplication, so long as they are bound to pay their notes in cash, and are restrained from issuing any under five pounds. Such was their situation previous to 1797. When we consi de• the general prejudices against private bafiks, it seems not unlikely that their exemption from interruption on the part of government was, in sonic degree, owing to the weight of Dr Smith's authority. Since 1797, though de prived of their title to his recommendation, they have had but too powerful a hold both on government and the country, in consequence of the public necessities ; and that remedy, which brings them back to the observance of former rules, must be slow of operation, and accom panied, we fear, with considerable embarrassment to the public. (x)