In 1792 another panic spread through the country. By-the-by, there seems to be a tendency in the visitations of these panics to return in ten years. Here we have the decennial interval 1782 and 1792 signalized by panics, to which recent experience enables us to add the more fatal years 1826 and 1836. After this, the question is rather a pertinent one, how are we to fare in 1846!

Looking to the Bank in 1791, we trace the usual connexion between its proceedings and the ensuing mischief. In 1791 we find a rise in the average amount of its issues exceeding a million and a half, followed by a reduction in the average amount of its bullion in the next year of more than two millions. This warning, however, does not appear to have been strong enough; for although the increased circulation of 1791 was attended by the much greater reduction of bullion just mentioned in 1792, yet the quantity of bank-notes kept afloat, notwithstanding the drain during this latter year, being still the same, another million and a half of gold took its departure in 1793; nor do we trace a reflux until the circulation was reduced, when, indeed, the gold returned.

It is impossible to resist the impression which chains of events, so closely linked together as these, are calculated to produce upon the mind. It may be very well to point to other circumstances coincident with these enlarged issues, and to show that they too favoured speculation and stimulated over-trading; still, after every reasonable allowance which may be fairly claimed on this score, it is manifest, that if the Bank directors at these junctures had duly noted the working of their own acts, they must have seen that the natural tendency of an increased circulation of paper currency is to displace gold, and that a contraction of the paper material contributes to a restoration of the gold.

We have now to take notice of an interval, during which a heavier blow was struck against the solidity of the Bank, than had ever before fallen upon it - a blow moreover, sustained in the midst of great monetary checks, and a commercial revulsion, the strongest and most momentous that up to the period in question had occurred in our history. We allude to the year 1797, and the events that entailed upon the Bank a suspension of cash payments at that epoch1 Unquestionably a deep share of the blame to be apportioned to the disaster of 1797, and the consequent monetary derangements into which this country was so injuriously forced, is justly chargeable against the Bank of England. Thenceforward for a series of years the institution became a political instrument, and it avails little for the character of the directors of that day, that they felt and confessed they were doing wrong, but abandoned their better judgment to the importunities of the prime minister, who persuaded them that the alarming state of public affairs made it necessary on their part to jeopardy their own safety, and the commerce of the country, in order to enable them to raise extraordinary funds for the vigorous prosecution of the war in which he had engaged. Urgent demands for money pressed upon the treasury; and the treasury unable to meet them pressed in its turn upon the Bank; the managers of which, as uninventive as they were weak, yielded to the solicitations for assistance made by Government, until their coffers had become so exhausted, that on Saturday, February 25, 1797, the stock of coin and bullion, which had risen after the panic of 1792, to an average of 6,878,610l. was reduced to 1,270,000l.; and as it was pretty clear that another week, such as they had lately experienced, would drain the last guinea of this small sum, an order-in-council was issued which prohibited the directors from paying in gold, until Parliament should make further provision upon the subject.

1 This was the second suspension of which the Bank of England has been guilty. Its establishment was attended with various difficulties which reduced its notes to a heavy discount, and ultimately compelled the directors to stop payment. This misfortune happened in 1696; but the Government coming to the rescue, the dilemma was soon overcome, and business was renewed with better success than had been experienced before.

Startling and decided as this step was, it nevertheless produced at first no injurious impression upon the public mind. It was accompanied by earnest assurances of great wealth upon the part of the Bank, while the leading merchants and Bankers in the city assembled, and publicly announced their willingness to take bank-notes in payment as usual. Soon after, a committee of the House of Commons was appointed to investigate the condition of the Bank, and having reported that the proprietors possessed a surplus of assets to the amount of 3,825,890l., over and above the sum total of their capital, then 11,648,800l., lent to Government, the general opinion seemed to be that no great mischief had been effected.

At the same time it must be observed, that political excitement had a great deal to do with the conclusion to which the people of England came on this occasion. The Government felt the measure indispensable to the prosecution of the war, which was popular, particularly with the upper classes. A powerful engine was necessary to enable the minister to carry out the extensive financial operations which each succeeding campaign increased; and in order to infuse spirit into the men of whom he made such valuable use, he thought it expedient to exonerate them from the ordinary liabilities attaching to them as Bankers. With him, however, political convenience, and not the good of the Bank or commercial interest, reigned paramount. He soon found that he had obtained hold of a weapon such as it well suited him to wield under such an emergency, and he resolved not to let it slip from his hand while there remained a foe to assault him. Parliament accordingly and the people were flattered into a belief that the restriction was an event abounding with national advantages. While this delusion prevailed it was easy to induce the legislature to continue the restriction until one month after the conclusion of the war. That event took place towards the close of 1801, but the unsettled condition of things at that juncture made a return to cash payments impossible. The restriction, therefore, was necessarily prolonged for an extended time; during which the war broke out again, and again the law provided that, until peace was definitely ratified, there should be no cash payments. The war raged for thirteen years, and when at last peace, after a long absence, returned, it was found that we were by no means equal to the labour of resuming our ancient standard. We required seven years of arduous preparation for that effort - the pains of which, it is no exaggeration to observe, fully doubled the sum of the injury inflicted by the original evil.