time, as the government wanted money, the bank capital was raised, until it reached £9,800,000 in 1742. The capital was further increased, until it reached £11,642,400* in 1781, and has so continued. The circulation of the bank always kept pace with the interest on the debt; that is to say, in 1794 the interest on the national debt was £9,890,904, and the circulation of the bank was £9,000,000. This was increased in 1797 to £12,000,000, when the annual interest was £14,270,616. The effect of this large circulation, necessary to the loan operations of the government, was to raise prices, and produce adverse exchanges, so that the bullion in the bank ran down to less than £1,000,000 in 1797. It now became evident that the circulation of the country was as great as trade would bear, to allow of specie payments, and that, therefore, the debts could not be extended; but at that time the aristocracy was engaged in its most insane war to put down the liberties of France; and, as the huge debts were to be paid by the people, who were not represented, that is to say, by those classes not included in the number of electors, it was determined to prosecute the war at all hazards. This led to a succession of the most atrocious frauds, forgeries and perjuries, that the world ever witnessed. The Bank of England was broken. It could not pay its debts, yet it was necessary that its paper should circulate to support the government. To allow it to fail outright would destroy its credit, and make its bills worthless. Feb. 21, 1797, Mr. Pitt was told of the approaching failure, and he advised sending Mr. Goldschmidt to the continent to buy gold, but was told it was too late. On the 24th Feb. the governor, Thornton, and a director, Bosanquet, were deputed by the directors to wait upon Mr. Pitt, to solicit the interference of the government, and to ask "how far they were to go in paying away gold." On the 25th the drain continued, and the bank was exhausted. On the 26th, Sunday, an Order in Council" was signed, which for the true spirit of bank impudence and humbuggery, has been equalled since only by the letter of Mr. Biddle, resigning the presidency of the late National Bank, March, 1839. It was as follows:

"Bank of England, Feb. 27, 1797.

"In consequence of an Order of his Majesty's Privy Council, notified to the bank last night, a copy of which is herewith annexed, the governor, deputy-governor, and directors of the bank of England, think it their duty to inform the proprietors of bank stock, as well as the public at large, that the general concerns of the bank are in a most affluent and prosperous situation, and such as to preclude every doubt as to the security of its notes. The direction mean to continue their usual discounts, for the accommodation of the commercial interests, paying the amount in bank notes; and the dividend warrants will be paid in the same manFRANCIS MARTIN, Secretary."

ner.

The drain of Saturday broke the bank, and this was the manner of announcement on Monday. The next step was deliberate perjury, by Mr. Pitt and the bank officers, who solemnly declared that the bank was able and willing to pay, but was restrained from paying by the government for

The capital of the Bank of England grew as follows:

1694, Lent Gov't....... £1,200,000 1728, Lent Gov't £1,750,000 1742, Lent.........1,600,000 " ..2,175,027 Do. on lottery 1,250,000 1746, ...2,000,000 1816, 3,000,000

1708,

1717,

"

"

1722, Do. for S. Sea St'k.. 4,000,000

9,375,027

1727, Rec. fr. sink'g fund 1,775,027

Received.....1,500,000

9,100,000

986,800 3,000,000

£14,686,800

1835, Rec'd Stock £3,671,700

£7,600,000

Total Lent...£11,015,100

“great state reasons." Hence, the breaking of the bank was called the "Bank restriction act." The time fixed for resumption was postponed, from time to time, and although it was at first for 52 days, it lasted 22 years. During this suspension it was that the larger portion of the present debt was contracted. The paper in circulation continued rapidly to depreciate, and prices of food and goods to rise, while stocks were kept low under the excessive loans, which were taken at low prices, and paid for in depreciated paper. The following table shows the revenue of England, the annual interest on the debt, the circulation of the bank, the price of gold, and of wheat, in several years:

Revenue.

Gold.

cwt.

Wheat. Price Sug'r. Hops. Ir. Bf. Interest. Circulation. per oz. per qr. 3 p ct. cwt. cwt. 8. d. 8. d. Stock. 8. 1792......19,258,814.....9,767.333....9,000,000....77 6....47 10........38....80....75 1797......53,483,813....14,270,616....9,674,000....77 6....52 2........52....94...125 1800......57,176,113....17,381,561.. 15,047,180... 85 0...110 5....63p ct.32...206...120 1806......71,831,400....23,006,006...17,871,170.... -....76 9....56 "..41...116...120 1809......76,017,779....24,813,624.21,019,600....99 9...103 3....68" 50....88...152 108,397,645....28,030,229...23,210,930...110 0...122 8....58" ..56...314...160 1814.....105,698,106....30,051,365...27,261,650...108 0...106 6....58 " ..92...160...178 ...52,648.847....30,807,249...25,126,700....83 0....72 3....72"..45...514...125 1820......54.282,985....31,157,846...24,553,160....77 10....65 10....68"..32....80...125 .53,060,354....28,257,872...20,130,120....77 10....50 0....93 "..45

1813..

1819

1845.

The rate of depreciation for the currency is marked in the advancing prices of gold and wheat, as well as other articles. In 1813 the depreciation of the paper was 41 per cent., and in that year £65,640,000 3 per cent. stock, and £3,600,000 4 per cent. was sold for £35,689,803 of paper money, depreciating 41 per cent. That is to say, the stock issued for what was equal to 6,497,157 oz. of gold in 1813, is now worth 14,530,000 oz. of gold, or the stock given for 7,000,000 qrs. of wheat in 1813, is worth 24,000,000 qrs. in 1845. The actual amount of taxes levied in 1813 was £74,000,000, equal to 13,874,385 qrs. of wheat. In 1845 the taxes were £53,060,354, equal to 21,000,000 qrs. of wheat, the prices of that year being a fair average. Hence the taxes were, actually, as represented by labor, 75 per cent. more in 1845 than in the midst of war. Again, the value of taxes in manufactured goods, shows a still greater increase. The returns of British exports are made in two values, one "official," fixed in 1666, and indicates quantities, the other is the actual invoice value at the time of shipment. In 1814 the official value of exports was £34,207,253, and the actual value £45,494,218; showing that £100 of official value was worth £133 in money; and the taxes of that year being £77,315,455, were consequently worth £58,131,921 in manufactures. The money value of manufactures has continued to decrease; and in 1845 the official value was £134,599,116, and the real value £60,111,081, or £100 official value was worth £40 in money. Hence, £53,060,354 of taxes was worth £126,591,713 of manufactures. As guaged by the value of the products of manufacturing industry, the taxes in 1845 were 117 per cent. higher than in 1814! The manifest ruin that must result from the progress of this state of things requires no comment. An end must come; and repudiation in England takes three forms: 1st, that advocated in the book under review, viz. "sweeping away the debt;" 2d, inconvertible paper money, to pay creditors in the same medium in which they bought the stock; 3d, lowering the standard of the coin: that is to say, to reduce the quantity of gold in a sovereign one-half, by calling in all the gold currency, and coining it into double the number of pieces, still calling them sovereigns.

These three are plans, advocated for the same object, viz. to get rid of the debt; and this question it is, on which the debates between the bullionists

and paper money men turn in England; and although the former triumphed in 1822 at the passage of the so-called "Peel's Bill," by which resumption was forced upon the bank, and again in 1844, when, by the new charter, the currency was further restricted, yet that evidence of strength is seemingly but a prelude to the final overthrow of the paper system, through the triumph of the paper party. The reduction of the standard of coins, and the return to irredeemable paper, are nearly the same in principle, except that the former is more unjust, while the latter is more sweeping in its effects. The reduction of the coin was practiced to the greatest extent by Henry VIII., under whose monstrous tyranny the circulation lost more than half its value. It was the only plan of indirect repudiation in those days, when there were no paper promises to be dishonored and depreciate. The immediate effect of a reduction of standard, as now proposed in England, is not only to relieve the government from one-half its debts, but also to deprive all private creditors of one-half that is due them. All rents and outstanding accounts will be immediately reduced one-half, but prices will be immediately doubled, because a person holding produce will not sell it for less than its value, although he may have due to him a certain number of sovereigns, and be compelled to take them of half weight. The holder of a barrel of flour worth £2, or 246 grs. of gold, will not sell it for 123 grs., because the pieces weighs less. The mint of England now coins 1 lb. Troy of fine gold into 46 sovereigns, consequently each weighs 123 grs. If the government should order it to be coined into 93 sovereigns, each one would weigh 61.5 grs., one half the gold would suffice to pay existing debts. Thus, if the bank holds £9,000,000 of gold, this would suffice to pay £18,000,000 of debts; but it would not be allowed to retain it; as soon as such a movement became probable, a simultaneous rush, by all classes, to profit by its possession, would cause it to disappear for a time, and ruin and discredit would result. Such a plan can never be ventured upon again. A return to irredeemable paper is practicable only, as a prelude to its final destruction.

con

In the present state of commerce, no nation can sustain for any length of time a depreciated paper currency. Two prices must immediately take place; and while all external trade is done for specie, the money of the world, internal trade will be carried on in a constantly depreciating paper that must ultimately cease to circulate. The "assignats" of France, the " tinental" money of the old federation, as well as the issues of the old colonial governments, and the tendency of bank paper during the suspension of the banks of the Union, from 1837 to 1839, and of the Bank of England during the twenty-two years of its suspension, sufficiently show the inevitable consequences of inconvertible paper money. The suspension of the Bank of England will involve its entire discredit, and its paper will cease to circulate altogether. The circulation of its paper, after the suspension of 1797, was aided by the grossest frauds, as well as the most blood-thirsty oppression at a time when general war isolated the commerce of England, gave her command of the ocean, and kept exchanges always in her favor. Yet, under all these circumstances, it fell to 41 per cent. discount for money. In the early years of the French Revolution, the vast issues of "assignats" by the revolutionary government, and the general discredit attending the wars, drove property and the precious metals to England; and as the wars progressed, large sums owned on the continent were invested in the English funds for safety These circumstances aided the views of the English government. The assignats of France were based on the best security for paper money, viz., lands; but from the quantity of genuine issues, and large quantities fraudulently put out, they speedily fell to nothing. These assignats were the chief resource of the French government, and Mr. Pitt's

mode of warfare was to discredit them as speedily as possible. For this purpose large quantities were manufactured in England, at Langley paper-mill, near the city of Durham, as was sustained in a court of law, through the fraudulent dishonor of a bill of exchange. These were sent over in ship-loads, and disbursed by royalist agents in all parts of France, particularly in paying emissaries to stimulate the atrocities of the Jacobin Club, of which, singularly enough, Mr. Huskisson, subsequently Minister of England, was a member and co-laborer with Robespierre and Danton, and Louis Philippe, present king of the French, was the door-keeper! These atrocious forgeries, added to the natural tendency of paper, speedily destroyed the "assignats" as a currency. As soon as the Bank of England suspended, its paper naturally began to depreciate, and two prices to show themselves-one for coin and another for paper. To permit this was speedy ruin. The bank, which previously had issued no notes below £5, was allowed to issue them for £1 and £2. These filled the small channels of circulation. The next step was to make these bits of paper a legal tender. This was not done directly; but a law was at first passed to exempt from arrest any person who offered notes as a tender, and subsequently the tender was enforced. To prevent an apparent rise in the price of gold, a law was passed to inflict punishment for selling coin, unless it was light, for more than its nominal value. At the same time ministers were giving 27s. per sovereign for gold to send abroad. Although persons were prohibited from selling full weight pieces for more than 20s., light ones were sold as high as 25s. each. With the depreciation of paper, forgeries were frequent, and it was made death to utter a forged note. For this offence 501 persons were committed in thirteen years, and 207 hanged! These murders were committed on the oath of an hired "inspector of bank notes," who swore simply that the note was "not genuine," and the holder was sent to the scaffold. Juries at last grew timid, and the ipse dixit of the inspector was not thought a sufficient death-warrant more particularly when they were discovered in a few cases to have been mistaken. All this did not prevent the depreciation of the paper currency from showing itself in a general rise in prices. Official salaries were raised, wages advanced, rents increased, and still prices outran the means of the working classes. When the peace took place, in 1815, it was found impossible to resume specie payments amidst such an inflation. The currency of the country was nearly as follows:

When bankers were not required to pay their notes, banks multiplied to any extent; 740 were created in the fourteen first years of the present century. Their circulation was only partially reported at that time. Alexander Baring, now Lord Ashburton, estimated the amount under £5 at £45,000,000; Mr. Lloyd estimated the whole at £50,000,000; Lord Louderdale placed it at £28,000,000, and the committee of 1818 made it £29,232,000. The exchequer bills we have put as currency, because, when they are depreciated, they act as such in the discharge of duties. Like our treasury notes, they bear interest; but when money is dear they fall to a discount, and return to the treasury for taxes. With this large circulation, and prices inordinately high, specie payments were impracticable on the return of peace, and two parties contended for its expediency ;-one advocated a continuance of the suspension, on the ground that such a reduction in

prices as the payment of gold would bring about, would be ruinous and oppressive; and the other contended for a return to specie payments, because of the impracticability of maintaining depreciated paper in a commerce with other nations. It was not until 1819 that a law, called "Peel's Bill," passed, suppressing notes under £5, after 1822, and providing for a return to cash payments at that date. In the seven years from the close of the war to the resumption, the utmost distress prevailed; disbanded soldiers returned home seeking employ; the vast expenditure of the government ceased; the demand for war munitions, both for England and the nations of Europe, was at an end; re-opened commerce, by allowing foreign goods to come to England, affected certain branches of industry before new ones were created; and European capital, that had been invested in English stocks, was withdrawn and sent home. All these circumstances affected prices, and would have done so in spite of any inconvertible paper that might have been used as a currency. The banks at the same time rapidly curtailed their issues, adding to the distress, and by so doing had raised paper to the level of specie, when the resumption took place, in 1822; but not without a modification of that part of the law which required a suppression of small notes. That event has ever been looked upon by one class as an immense " blunder," and they strive for its repeal. Certain it is, that if it had not taken place, and inconvertible paper money had continued to be used, the whole system would long since have ceased to be. Resumption was the salvation of the public credit and the funded interest. But, say the anti-bullionists, it has been at the expense of the people and the welfare of the country. The passage of that act, Mr. Canning said, "set at rest the question forever." It was hailed by stockholders as their protection, and immediately a season of the wildest speculation commenced; stocks of all descriptions ran to the highest rates, and immense quantities were created to sell. All nations of the world took advantage of it, and in two years twenty-six foreign states issued loans in London, amounting to £56,000,000. Of these, sixteen never paid any interest. This was followed by a revulsion, that in effect broke the bank. In 1832, Mr. Jeremiah Harman, agent for the Russian government, and the head of a banking firm, gave evidence in relation to that crisis before the Parliamentary committee, as follows:

"Was there a period in December, 1825, during which the bank contemplated the probability of being entirely exhausted of gold? At the latter end of 1825, decidedly."

66

Do you recollect the lowest quantity of gold which the bank possessed during the period of December, 1825? I do not remember, but it was miserably low." "Was it under £1,300,000? Unquestionably."

"What would, in your opinion, have been the consequence of suspension? I hardly know how to contemplate it."

The bank issued one pound notes at that period."

"Was that done to protect its remaining treasures ?"

66

Decidedly, and it worked wonders. And it was by great good luck that we had the means of doing it; because one box, containing 1 notes had been overlooked, and they were forthcoming at the lucky moment."

"Had there been no foresight in the preparation of those notes? None whatever, I solemnly declare ?"

"Do you think that the issue of those £1 notes did arrest a complete drain? As far as my judgment goes, it saved the credit of the country.”

So narrowly did the system escape 22 years since. It must be remembered, however, that the witness failed last year, having been fraudulently bankrupt for many years. In 1826, a law to restrain the issue of small notes after 1829 was passed, except for Scotland, where they continued to circulate at the solicitation of a deputation of banks, at the head