in Paris for two months; but, as neither party was sincere, the treaty came to nothing. The fact was, that peace was the furthest thing possible from the thoughts of the Directory. After the conquest of La Vendee, they had an army of 100,000 men set free, under a general who is usually acknowledged to have been the equal of Napoleon in military talent, and who was burning to emulate his exploits in Italy. While the pretended negotiations for peace were going on, the Directory were organising an immense expedition for the invasion of Ireland. The orders to sail were transmitted to it several weeks before the British envoy was expelled from Paris, and it actually sailed two days before he left. Fortunately, this great armada was dispersed by a tempest, a few straggling vessels reached Ireland in the last week of December, but the rest were obliged to put back to France

119. This terrible menace which had been so long hanging over the country, and whose destination it was vain to conceal, inspired the utmost alarm, and there was a continual demand for guineas in Ireland. The year 1797 commenced with the most gloomy apprehensions and depression; the country bankers discerned that the first burst of the storm would fall upon them, and determined to provide for it, by obtaining as much specie as they could from London, and, accordingly, the drain continued with increased rapidity after the beginning of the year

120. Mr. Pitt had hinted in his interview with the Governor of the Bank on the 1st February, that a loan for Ireland would probably be required, which would probably not exceed £200,000, but soon afterwards the directors were struck with dismay on hearing that the amount required was £1,500,000. On the 10th February the Directors came to a resolution that before they could entertain any proposal for the Irish loan, the Government must pay off debts to them amounting to £7,186,445, of which they handed him in the details

121. At that time the Banks at Newcastle had a more than

ordinary demand upon them for cash. In addition to the manufactories and collieries, the number of troops stationed in that part of the country had been considerably augmented. The banks had imported an extra supply of cash to meet their purposes, and were negotiating for more when an event happened which brought on the crisis. A French frigate went into one of the Welsh harbours and landed 1,200 men. At the same time an order came down from Government to take an inventory of the stock of the farmers all along the coast, and to drive it into the interior if necessary. These circumstances created a perfect panic among the farmers: on Saturday, the 18th February, being market day, the farmers, who at that time of year had the principal part of their rents in their hands, actuated by the terror of an immediate invasion, hurried into Newcastle the produce of their farms, which they sold at very low prices, and immediately rushed to the different banks to demand specie. Seeing this universal panic, the banks came to an agreement to stop payment on the Monday, if the panic did not subside, which they accordingly did

122. On the 21st February the state of the Bank became so alarming, that the directors resolved that the time had come when they must make a communication to the Government. The quantity of bullion had been rapidly diminishing, and the constant calls of the bankers from all parts of the town for cash, showed them that there must be some extraordinary reason for it. Mr. Pitt was aware that this proceeded from the general alarm of invasion, which he thought was magnified much beyond anything to warrant it. It was agreed that a frigate should be sent over to Hamburg to purchase specie. On the 24th of February, the drain became worse than ever, and inspired them with such alarm for the safety of the House that they sent a deputation to Mr. Pitt to ask him how long he considered the Bank should continue to pay cash, and when he should think it necessary to interfere. Mr. Pitt said it would be necessary to prepare a proclamation to put a stop to cash payments, and to give parliamentary security for the notes. But in that case it would be necessary to appoint a Secret Committee of the House to look into the affairs of the Bank. The deputation assured

him that the Bank would readily agree to this; and it was resolved to call a meeting of the chief bankers and merchants of London to come to some resolution for the support of public credit in this alarming crisis.

123. The news of the stoppage of the Newcastle banks spread like wildfire throughout the country, and soon reached the metropolis. The drain upon the bankers' coffers now became a run; the first serious apprehensions that danger was imminent, were felt on the 21st of February; but the drain then became unexampled, till on Saturday, the 25th, the cash was reduced to £1,272,000. Before this, the directors, in a state of utter bewilderment at the state of the country, had used the most violent efforts to contract their issues. In five weeks they had reduced them by nearly £2,000,000. On the 21st January they were £10,550,830; on the 25th February they were £8,640,250. But even this gave no true idea of the curtailment of mercantile accommodation, for the private bankers were obliged, for their own security, to follow the example of the Bank. In order to meet their payments, persons were obliged to sell their stock of all descriptions, at an enormous sacrifice. The Three Per Cents. fell to 51, and other stock in proportion

124. On Saturday, the 25th, the Court felt that the fatal hour was at last come, when they must for the first time since its institution, come to a total suspension of payments. A meeting of the Cabinet was held on Sunday, at Whitehall, and an Order in Council was issued, requiring the directors of the Bank of England, to suspend all payments in cash until the sense of Parliament could be taken on the subject

125. The King, the next day, sent a message to Parliament, to inform them of the step that had been taken, and recommended the subject to their most serious and immediate attention. Mr. Pitt moved that the message should be taken into consideration the next day, and he should propose that a Select Committee be appointed to investigate the state of the Bank's affairs, which he believed were in the most solid condition

126. The directors of the Bank had the order in Council printed and widely circulated, and issued a notice of their own, to say that the general concerns of the Bank were in the most affluent and prosperous condition, and such as to preclude every doubt as to the security of the notes. At this time the cash in the Bank was reduced to £1,086,170

127. The relief produced at the instant, by the definite determination to suspend cash payments and extend their issues of paper, was very great. Within one week it increased its accommodation by nearly two millions. On the same day a resolution was entered into by 4,000 of the merchants in the city, to combine to support the credit of the notes

128. Both Houses of Parliament appointed Committees to examine into the affairs of the Bank. The Committee of the House of Commons reported the outstanding obligations of the Bank, on the 25th February, were £13,770,390, and the total amount of their assets, £17,597,280, leaving a surplus of £3,126,890 over and above the debts of the Government, amounting to £11,686,800, which paid them 3 per cent.

129. Both Houses reported that it was advisable for the public interest that the suspension of payments should be continued for a limited time, and a bill for that purpose was accordingly brought in. After some debates, which threw very little light on the subject, the Act (Statute 1797, c. 45) was passed. Its chief provisions were

1. A clause of indemnity to the Bank and all connected with it, for anything done in pursuance of the order in Council

2. The Bank was forbidden to make any payments in cash to any creditors, except in certain cases, and protected from all law proceedings

3. The Bank might issue cash in payments for the Army, Navy, or Ordnance, in pursuance of an order from the Privy Council

4. The Bank was to make no advance above £600,000 for the public service, in cash or notes, during the restriction. 5. If any person deposited any sum, not less than £500, in

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gold, in exchange for notes in the Bank, it might repay threefourths of the amount

6. It might advance £100,000 in cash to the bankers of London, Westminster, and Southwark, and to the Bank of Scotland, and the Royal Bank of Scotland, £25,000 each

7. Payment of debts in Bank notes to be deemed as payments in cash, if offered and accepted as such

8. No debtor was to be held to special bail, unless the affidavit stated that payment in bank notes had not been offered

9. Bank notes would be received at par, in payment of taxes 10. Bank might issue any cash it received since 26th February, upon giving notice to the Speaker of the House of Commons, and advertising in the "London Gazette," and on the Royal Exchange

11. The Act to continue till the 24th June

130. An Act was also passed to enable the Bank to issue notes under £5 (Statute 1797, c. 28), and by c. 32 this power was extended to the country banks, but they were to continue liable to pay money on demand for them, and, on failure of doing so within three days after demand, any justice of the peace might cause the amount and costs to be levied by distress

131. All banking companies and bankers in Scotland were allowed to issue notes payable to bearer on demand for any sum under 208.

132. We cannot refrain from noticing that, in the debate. on this measure, Mr. Pitt expressed the identical views on the subject of the circulating medium that are the leading principles of this work. He says: "As so much has been said on the matter of a circulating medium, he thought it necessary to notice that he did not for his own part take it to be of that empirical kind which has been generally described. IT APPEARED то HIM ΤΟ CONSIST IN ANYTHING THAT ANSWERED THE GREAT PURPOSES OF TRADE AND COMMERCE, WHETHER IN SPECIE, PAPER, OR ANY OTHER TERMS THAT MIGHT BE USED"