All bank-notes, let them be issued where or by whom they may, in England or in Russia, by the United States' Bank that used to be at Philadelphia, or the Bank of Vienna, are nothing but promises to pay on demand certain coins specified upon the face of them, of a prescribed quality and weight; and whenever a note will not buy in the money-market the quantity of bullion represented on its face, it is depreciated, and the ratio of such depreciation is the difference between the sum for which it was issued and the sum it will actually produce. That sum, it is unnecessary to add, will at all times depend upon the supply in the market. There was, therefore, a certain criterion of the extravagance of the Bank, but it was disregarded; and, perhaps, all circumstances remembered, our great surprise will be, that it was not more quickly disregarded and to a still greater extent than we are about to exhibit. An interval elapsed immediately after the suspension of cash payments, during which, as has been already observed, the Bank directors, either ignorant of the extraordinary virtues with which their Restriction Act was pregnant, or afraid to bring them to light and test their powers, continued to regulate their issues with moderation and propriety. Up to 1800 bank-notes were on a par with gold; and such then was the strength of the establishment and the soundness of the currency, that, as it is universally admitted, we might have resumed cash payments without having done any sensible injury to the currency or to prices. Sed dis aliter visum: the policy of ministers ran right ahead the other way; and the new privileges began to work their wonders at a rapid rate: bank-notes were pushed out in abundant quantities, as if to make up for lost time; gold at once left the country; and the value of the notes became depreciated in proportion to their excess. The years 1801 and 1802 were years of scarcity; we paid in the former upwards of eight, and in the latter upwards of ten, millions of money for imported corn. Bank-notes in 1802 were at a discount of from 7 1/3 to 8 1/3 per cent. This was the first experiment, and the shock it gave seems to have produced some uneasiness, and to have warned the directors of the policy of greater caution; for we find the discount on their notes from 1803 to 1809, both years inclusive, was only 21. 13s. 2d. per cent. In 1809 and 1810, however, all restraint was thrown off, and all principle lost sight of. The average amount of banknotes in circulation, which had never exceeded seventeen millions and a half in any one year from 1802 to 1808, both included, swelled in 1809 to 18,927,833l., and in 1810 to 22,541,523l. Meantime the private bankers throughout the country were far from being idle; tempting opportunities to do increased business presented themselves to those gentlemen also, and they were not neglected. The country Bankers added their due contributions to the excess of paper in circulation. The discount on bank-notes corresponded with these wild issues; it was 21. 13s. 2d. in 1809, and 13l. 9s. 6d. in 1810.

But the intelligence of the country had now been roused, the judgment of reflecting minds had been applied to the subject, and various publications - to some of which allusion has been made in former chapters - began to appear, and by expressing correct views and sound opinions, promoted general discussion, and helped to stem the wasteful torrent of ignorant profusion by which the industry of the country was deluged. The Bullion Committee sat, most opportunely for these good purposes, in 1810; and by affirming in its report the propriety of returning to cash payments, gave due weight to the labours of individuals, and for a brief season excited hopes that the reign of common sense and reason was about to revisit ministers, Bank directors, and the mass of the people. The issues of the Bank were checked; but before a year had passed we suffered a relapse, the mad fit returned in all its first violence, and we plunged into greater excesses than ever. In May, 1811, the House of Commons stultified itself at the bidding of the chancellor of the exchequer, by declaring that a one-pound Bank of England note and a shilling were equivalent to a guinea, at a time when every member of the house might have gone into the market and openly got ten per cent. premium for every guinea he could produce.

This extraordinary resolution, - perhaps the strongest instance upon record of the blind force of party folly, - which in point of fact went the absurd length of maintaining that ninety pounds and one hundred pounds were one and the same thing, equal sums of money, - relieved the Bank of all uneasiness, and the cornucopia of its issues was again thrown upon the market with lavish indiscre-tion. The consequence was, that in 1812 bank-notes were at a discount of 20 3/4, in 1813 of 23, and in 1814 of 25 per cent; in other words, gold, which if bought with Bank of England notes in 1800 might have been had at 3l. 17s. 10 1/2d. an ounce, was, in 1812, 4l. 15s. 6d. an ounce, and in 1814, 5l. 4s. an ounce.

The effect produced by the difference between the actual price of bullion and the depreciated value of our paper currency at this period upon the first necessary of life, wheat, has been well exhibited, in a short table which gives the sums at which a quarter of wheat was to be purchased with gold and with paper from the year 1809 to 1814.

But the period of retribution was coming round, and heavy was its pressure when it did reach us. While the war was drawing triumphantly to a close, while victory crowned our arms by sea and land, while high rents and high prices diffused universal confidence, and approaching peace, big with promises of greater plenty than we had ever enjoyed, intoxicated the nation, ruin had already stretched out his withering hand to seize us, and a terrible revulsion quickly ensued. In 1814 the Dutch ports were opened; the harvest was deficient; and that most searching of the calamities to which our artificial condition is exposed no sooner visited the land, than the importation of foreign corn occasioned a great decline in the price of the principal article of agricultural produce, which gradually extended to the price of commodities generally. Unprecedented suffering now took place; the storm swept the country through, and raged with increasing violence until 1816, by which time the agricultural and Banking interests generally were reduced to the lowest pitch of distress. Farmers were insolvent everywhere; mercantile firms became bankrupt by thousands, and levelled their connexions indiscriminately in the dust; while as to the Bankers, between those who either partially suspended business or wholly broke, in the years 1815 and 1816, there was a diminution of no less than 240 firms. The contraction of the circulating medium throughout the country (it was estimated at twenty millions) induced by these disasters, and by the necessity of paying cash for the foreign corn we imported to supply our own deficient crops, raised the value of Bank of England notes so much, that the former discount upon them of twenty-five per cent. was reduced in October, 1816, to 11. 8s. 6d. per cent.