VOL. XVIII. No. 20.] LONDON, WEDNESDAY, OCTOBER 17, 1810. [Price 1s.

"These five pound notes will circulate chiefly among little shop-keepers, butchers, bakers, marke " people, renters of small houses, lodgers, &c. All the high departments of commerce, and the "affluent stations of life were already overstocked, as Smith expresses it, with the Bank-notes. No 44 place remained open wherein to crowd an additional quantity of Bank-notes but among the class of people I have just mentioned, and the means of doing this could be best effected by coining five pound notes. But no new supplies of money can, as was said before, now arrive at the Bank, as all the "taxes will be paid in paper. What, then, would be the consequence, were the Public Creditors to "demand payment of their Dividends in Cash, or demand Cash for the Banknotes in which the Divi"dends are paid; a circumstance always liable to happen?"-PAINE. DECLINE AND FALL OF THE ENGLISH SYSTEM OF FINANCE. Published in 1796.

"I should stop here, but there is a subject of so great importance, and so nearly connected with the "Coins of your Majesty's realm, that I should not discharge my duty if I left it wholly unnoticed; I mean what is now called Paper-currency; which is carried to so great an extent, that it is become highly inconvenient to your Majesty's subjects, and may prove, in its consequences, if no remedy is applied, dangerous to the credit of the kingdom. It is certain, that the smaller Notes of the Bank of England, and those issued by country Bankers, have supplanted the Gold Coins, usurped their func-" ❝tions, and driven a great part of them out of circulation in some parts of Great Britain, and especially in the southern parts of Ireland, small Notes have been issued to supply the place of Silver “Coins, of which here is certainly a great deficiency.”—CHARLES JENKINSON, EARL OF Liverpool. Letter to the King. Published in 1805..

FIVE POUNDS came to be issued; when rents, salaries, yearly wages, and almost all the taxes came to be paid in paper; when this became the case, and when, of course, every part of the people, except the very poorest, possessed, occasionally, bank notes, it was impossible, that men should not begin to think, that there was some difference between Gold and Silver and Bank notes, and that they should not become more desirous to possess the former than the latter. In other words, it was impossible, that men should not begin to have some suspicion relative to the Bank notes; and, it is very clear, that the moment such suspicion arises, there is an end to any paper-money, which is convertible into Gold and Silver at the will of the bearer, who will, of course, lose not an instant in turning that of which he has a suspicion (however slight) into that of which it is impossible for any one to have a suspicion.

been a great favourite at court, and especially as having, upon this occasion, addressed himself directly to The King, his opi nions, though of no consequence elsewhere, are worthy of some notice in this country, and may possibly, in some minds, tend to produce that conviction, which, in the same minds, a stupid and incorrigible pre judice would have prevented from being produced by all the powers of HUME OF PAINE,

But, we must now return to the Bank, and see how it happened that the people went to demand money in payment of the notes in 1797. That it did happen we all know; but, there are not a few of the people forming the present population of the country, who have forgotten, or, who have never known, the true history of the Stoppage of Gold and Silver payments at the Bank of England; yet, without a knowledge of this history, and a thorough knowledge of it too, we cannot possibly pursue our inquiries to a satisfactory result.

there

We have seen abundant arguments to prove, that paper-money, that promissory paper of every sort, is the offspring and representative of Debs; that a National or Public Debt never can fail to bring forth bank-notes, or paper promises of some sort or other; that, of course, as the Debt increases and its Interest increases, will be, and must be, an increase of the paper, in which that interest is paid; and, in the last Letter, at page 581, we saw, in the Table of increase of the Debt and Interest from the beginning of the Anti-Jacobin War to the year 1797, we here saw, in practice, the cause of the making of the FIVE POUND bank notes. But, as we have. since seen, that measure was not sufficient. We saw, at p. 584, that it was to avoid paying in Gold and Silver the sums, or parts of sums, from TEN to FIVE pounds, which must have induced the Bank to make and

Thus it happened in 1797, as PAINE, in his pamphlet, published only the year before, had foretold, in the words of the first of my mottos to this Letter. He there told his readers how the issuing of Five Pound notes would operate; he pointed out how this measure would keep real money from the Bank; and he asked what must be the consequence, if (as it might any day happen) the people should go to the Bank and demand cash for the notes, This did happen the very next year; and, as he foretold in another part of his pamphlet, those who went to present their notes first came best off. LORD LIVERPOOL, in the passage, which I have selected for my second motto to this Letter, had, when he wrote, seen the thing happen; he hail seen the fulfilment of what Mr. PAINE had foretold, and spoke, therefore, of the dangerous consequences of an excessive issue of paper, with the fact before his eyes. Experience, which, says the verb, it makes tools wise," had taught his put out notes so low as FIVE POUNDS. If Lordship, in 1805, what he might have you look again at that Table, gentlemen, learnt from MR. PAINE in 1796. Never you will see how the increase went on; theles, the opinions of Lord Liverpool you will see, that it was greater and greater have some weight, and are worthy of at-every year. In the year 1793, the addition tention with us in England; because, though his talents and mind were of a cast quite inferior to those of such men as HUME and PAINE and BURKE, and though there is nothing in what he has said, which I had not said, in the Register, years before, still as being a man of great experience in bu siness, as having, during this whole reign

pro

to the annual Interest was (speaking in round numbers) only 250 thousand pounds; but, in the year 1797, the addition was, 34 millions; that is to say, a third part of as much as the whole amount of the Interest previous to the Anti-Jacobin war. Thus did this war of PITT against the Repub licans of France cost, in only one year,

nearly as much, in addition to Debt, as the cost of the whole of the American War, the extravagant expenditure of which had, till now, been proverbial.

There were, however, other causes at work, at the time of which we are now speaking; causes operating upon the paper system from without; causes which must be here fully stated; for, besides that a knowledge of them is essential to our inquiry, it is demanded by justice towards those who opposed the ruinous measures of PITT, and who foretold their consequences; and this demand is, in a peculiar manner, addressed to ME, who, from being so situated as to be unable to come al, or even suspect, the truth, while many circumstances conspired to make me take for truth that which was false, was not only one of the dupes of the system, but who, unintentionally, contributed according to the degree of my talents, towards the extension of the circle of duplicity.'

inventors and supporters of it had been, from time to time, propagating alarms of various sorts, by the means of which alarms, whether they themselves believed in them or not, they were enabled to do things, which never had before been either known or heard of or dreamt of in England. The mode of reasoning with the people was this: You see, that, in France, the revolution has deprived the people of both property and life: there are those who wish to cause a revolution in England: the measures taken, or proposed, are absolutely necessary to prevent the accomplishment of this wish: therefore, you have your choice, either to submit quietly to these measures, whatever portion of your liberty or property they may take away, or let in upon you a revolution which will take away all your property and your lives into the bargain. There was no room for hesitation; and thus were the people determined, and with this view of the matter did they proceed, until the time above referred to, the ministers being, probably, full as much alarmed as the people, and certainly not with less cause.

At times, however, especially after the war had continued for three or four years, the effect of alarm seemed to grow very faint. Danger had been so often talked of, that, at last, it was grown familiar. In the year 1796, however, things began to wear a serious aspect. All the minister's predictions and promises had failed; his

Credit is a thing wholly dependent upon opinion. The word itself, indeed, has the same meaning as the word belief. As long as men believe in the riches of any individual, or any company, so long he or they possess all the advantages of riches. But, when once suspicion is excited, no matter from what cause, the credit is shaken; and, a very little matter oversets it. So long as the belief is implicit, the person, towards whom it exists, goes on, not only with all the appearances, but with all the advan-allies, to whom and for whose support so tages, of wealth; though, at the same time, he be insolvent. But, if his wealth be not solid; if he have merely the appear ance of wealth; if he be unable to pay so much as he owes, or, in other words, if he ba insolvent, which means neither more nor less than unable to pay. When an individual is in this situation, he is liable, at any moment, to have his insolvency exposed. Any accident, that excites alarm in the minds of his creditors, brings the whole upon him at once; and he who might otherwise have gone on for years, is stopped in an instant.

Thus it will happen to Companies of Traders as well as to individuals; and thus it did happen to the Bank Company, at the time we are speaking of, and at which time an alarm of invasion prevailed through the country.

many millions had been paid by the people of this country, had all laid down their arms or had gone over to the side of France; the assignats in France had been annihilated without producing any of the fatal consequences which PITT had so confidently anticipated, and upon which, indeed, he had relied for success; and, a negociation for peace, opened at the instance of England, had produced nothing but a convincing proof of the high pretensions of the enemy, and of his confidence in his cause and resources.

When the parliament met, therefore, in October 1796, the ministers and their adherents seem to have been full of real apprehension. They failed not to renew the signal of alarm, in which, indeed, they were kept in countenance by the enemy, who had openly declared his intention of invading the country. From the very out-set of the war, the subject was mentioned in the King'a

that there was a party in the country in alliance, as to wishes, at least, with the enemy.

While these measures were before parliament, the venal part of the press was by no means inactive. Representations the most exaggerated were made use of in speaking of the temper and designs of the enemy, always insinuating that the opponents of the Minister were ready to join the enemy, or, at least, wished him success. The French were exhibited as being quite prepared; and, a descent was held forth as something almost too horrible to be thought of. This was useful for the purpose of making the Arming Acts go down; but, the alarmists did not seem to be aware of its cutting another way; and, least of all do they appear to have imagined, that it would set people to thinking of what effect invasion might produce upon bank-notes.

speech, upon a part of which a motion was grounded, on the 18th of October, for the bringing in of bills for the raising men, with all possible speed, for the purpose of defending the country against invasion. In virtue of a resolution passed in consequence of this motion, three acts were passed with all possible rapidity, the first for providing an augmentation for the militia to be trained and exercised in a particular manner; the second for raising a certain number of men in the several counties of England and Scotland (there were two Acts), for the service of the regular Army and the Navy; and the third for raising a provisional force of cavalry to be embodied, in case of necessity, for the defence of these kingdoms;* which acts were finally passed on the 11th of November 1796. When this measure was under discussion, MR. Fox, MR. SHERIDAN, and others opposed it upon the ground of its not being necessary, and MR. Fox, who called it a requisition, after the French In the mean while, the negotiations for manner, observed that, if it was necessary peace were broken off by the month of to our safety, it was the conduct of the December, which gave rise to new alarm. ministers and of the last parliament who This was soon followed by the appearance confided in them, which had brought us of a French naval force, with troops on into that miserable situation, "a parlia- board, off the coast of Ireland; and, though ment," he said, "which had done more its return back to France, without attempt"to destroy every thing that is dear to us, ing a descent, might, one would think, have than in better days would have entered tended to quiet people's fears, it was, on "into the mind of any Englishman to at- the contrary, made the ground work of a tempt, or to conceive; a parliament by still more general and more vociferous "whom the people had been drained so alarm. There was now no bounds to the much, and from whom they had had so exaggerations of the venal prints. From "little benefit; a parliament that had di- the first week in January, (1797) to the "minished the dearest rights of the people third week in February, the people were "so shamelessly and so wickedly; a par- kept in a state of irritation hardly to be "liament whose conduct it was that had conceived. Addresses to them, in all "given rise to this measure." MR. Fox shapes and sizes, were published, calling added, that he did not believe that inva- upon them to arm and come forth at once, not sion would render any such measure ne- waiting for the slow process of the Militia cessary; that the real resources of the and Cavalry Acts. "Already," were they country consisted in the people's attach- told, "the opposite coast was crowded ment to the constitution, and that, there- "with hostile arms; forests of bayonets fore, the proper measure to be adopted" glistened in the sun; despair and horron would be to allow them to possess the spirit" were coming in the rear." It was next of that constitution. The minister and his partizans contended, however, that there was real cause for alarm; and PITT said, that as to the constitution "it still "possessed that esteem and admiration of "the people, which would induce them to "defend it against the designs of domestic "fces, and the attempts of their foreign "allies;" thus, according to his usual practice, proceeding upon the assumption,

* 37 George HI, Chapters 3, 4, 5 and 6.

to impossible that this should not make people think of what was to become of them; make them reflect a little as to what they were to do in case of invasion; and, it required but very little reflection to convince them, that money, at all times useful, would, in such a case, be more useful than ever. Whence by a very natural and easy transition, they would be led to contemplate the possibility of real money being rather better than paper. That's enough! There needs no more t

Away, in an instant, they go to the Bank, where the written promises tell them the bearer shall be paid on demand.

This effect of the alarm, an effect of which neither PITT nor any of his adherents seem ever to have had the smallest suspicion, and, indeed, when MR. Fox cautioned them against it, they affected to laugh at what he said; this effect of the alarm, raised and kept up by the minister and the great Loaners and men of that description; this effect of the alarm began, it appears, to be sensibly felt, at the Bank of England, immediately after the appearance of the French fleet off the coast of Ireland; and, as it afterwards appeared, from official documents, the drain had become so great by the end of the third week in February, that the Directors saw the impossibility of going on, unless something could be done to put a stop, or, at least, greatly to check, the run upon them for cash. The people were, in short, now doing precisely what PAINE, only about ten or eleven months before, had advised them to do, and the consequence was precisely what he had predicted.

arm; the people were, by these same writers, now told, that alarm might be pushed too far; that, if so pushed, it might do us an injury equal to invasion; that every one must see, that the French wished to ruin our credit; that, of course, to shew an eagerness to sell out of the funds was to favour the designs of the enemy; that it was, besides, the greatest nonsense in the world for people to suppose that their property was not safe in the Bank of England; that no apprehension need be felt, and that the people who had money in the funds, might safely rely upon the woodeņ walls of Old England. Though, observe, the whole country was actually in movement, down to the very beadles, in order to raise men for defence by land!

"The evidence of facts" was before the people's eyes. The alarm was not to be allayed by assertions like these. And, though the venal prints grew more and more positive in their assurances, that there was now no danger from invasion; though they (on the 21st of February) assured the people, that it was an error to

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suppose, that the enemy was at our "gates," and that "a panic might do in"finite mischief to public credit," people still kept carrying their notes softly to Threadneedle-sire; they kept on selling out of the Stocks'. report, on the day last-mentioned, the pearance of a French fleet, with Troops on board, off BEACHY HEAD *, immediately owed by

It was now extremely curious to hear the language of the venal newspapers, who had, for months before, been endeavouring to excite alarm, and who abused MR. Fox and his party, called them Jacobins, and, sometimes, traitors, because they said, that the alarm was false, and was invented for bad purposes. These very news-papers now took the other side. They not only * "PORTSMOUTH, Feb. 20.-An acthemselves said, that the alarm was ground- "count reached this place, this morning less; but they had the impudence, the un- "at half past ten, A. M. of several French paralleled, the atrocious impudence, to "transports, convoyed by armed vessels, having accuse the Jacobins, as they called them, of" been seen off Beachy Head. The intellihaving excited the alarm, for the purpose of injuring public credit!

"gence came by the signal posts, and "Admiral Sir P. Parker immediately on

receiving it, ordered two ships of the This change of tone was begun on the "line and five frigates to slip their cables 17th of February by those notoriously ve- " and proceed to sea. This squadron is nal prints, those prints so far famed above all "now out of sight, and all the other ships others in the annals of venality; the "TRUE "are getting in readiness.The sensaBRITON" and the "SUN." The thing was "tion that this made in the City may be begun in "An Address to JOHN BULL," in " easily conceived. It spread a very genewhich the "most thinking people," who "ral alarm; but it was soon contradicted: were still all in frying confusion to get on "Letters, written as the post was setting with the levies of additional militia, and "out, stated that the alarm had been ocparish men for the army and navy, and "casioned by a mistaken signal, and that the provisional cavalry; the "most think- "instead of a fleet of 300 French transports, "ing people," while all hurry and bustle "it was no more than a signal that 3 privaabout this, were told by these shameless "teers had been discovered off Beachy writers, who had almost called the people" Head.-Such, however, is the consetraitors for not making greater haste to quences of the state of alarm to which