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least perception of their incongruity. Never was there a more striking instance of confident assumption on the one hand, and fatuity on the other. To add to the strangeness of the picture, he occupies the front rank among the Economists as an original and profound thinker, one who exploded many of the radical errors, who placed on firm foundations some of the most important truths of Political Economy, and to whom it is more indebted than to any writer but Adam Smith. His name is never mentioned but with expressions of profound respect. From his example, it would seem that no mind is capable of discussing the subject of money, and of preserving, at the same time, its balance and integrity. The charm or influence which so subverts the sense of mankind is a problem in psychology well worthy the most careful investigation. Its solution might help the race to attack and overthrow delusions upon other subjects, equally deep-rooted and far more mischievous; for, in the matter of money, the most groundless and absurd theories are often found intimately associated with the greatest practical talent for its accumulation and administration. Life nowhere else presents an example of such complete disassociation between the practical and speculative sides of our nature.

As the recommendations contained in the Report of the Bullion Committee were rejected, the condition of the Bank and its relations to the government and the public remained unchanged. The price of gold, however, gradually rose; and, after numerous fluctuations, reached its highest point, £5 108. the ounce, in August, 1813. Upon the abdication of Napoleon, in 1814, it fell off to £4 68. On his return from Elba, in 1815, it rose to £5 78. Upon his final overthrow, its price rapidly declined; and in October, 1816, it was as low as £3 188. 6d. the ounce. On the 17th of April, 1817, the Bank gave notice of its readiness to pay off its £1 and £2 notes dated prior to January 1, 1816; and, on the 18th of September of the same year, of its readiness to pay off all its notes dated prior to January 1, 1817. This action was voluntary on the part of the Bank, as the restriction, which was to expire at the end of six months after a definitive treaty of peace, was extended, in 1815, to July 5, 1816; again extended to July 5, 1818; and again, to July 5, 1819. On the 28th of

February, 1817, the Bank had in its vaults £9,680,000 in coin and bullion; on the 31st of August, of the same year, £11,688,000; and on the 28th of February, 1818, £10,055,000. Its liabilities on its notes and deposits, on the 28th of February, 1817, equalled £38,223,000. It was at that time, apparently, in position to attempt resumption. But, although peace had for some time been established, order had by no means been restored in commercial circles; and as the Bank possessed no available capital of its own, except its accumulated profits, amounting only to a few millions, it had really no control over the coin that had accumulated in its vaults. This was speedily drawn out in the adjustment of the enormous debts growing out of the recent gigantic struggle, and in consequence of the commercial embarrassments and disasters which necessarily accompanied the attempt to resume. On the 27th of February, 1819, the coin at the Bank was reduced to £4,184,000; and as it was seen that if it continued to pay its means would speedily become exhausted, Parliament early in 1819, again interposed, forbidding any further cash payments. At the same time, it took the whole subject vigorously in hand, and with little delay passed an act, of which the following are the most important provisions:

"1. The Restriction Act was continued, absolutely, from the 5th of July, 1819, to February 1, 1820.

"2. Between February 1 and October 1, 1820, the Bank was required to pay its notes in gold bullion, of standard fineness, at the rate of £4 1s. per ounce; but not to be liable to a demand for a less quantity than sixty ounces at one time.

"3. Between October 1, 1820, and May 1, 1821, the Bank was required to pay its notes in gold bullion upon the same plan, at the rate of £3 19s. 6d. per ounce.

"4. Between May 1, 1821, and May 1, 1823, the Bank was to pay in gold bullion upon the same plan, at the rate of £3 17s. 104d. per ounce, which was the mint price of gold.

"5. From May 1, 1823, the Bank was to pay its notes in the gold coin of the realm.

"6. But between February 1 and October 1, 1820, the Bank might make payments at a less rate than £4 18., and not less than £3 198. 6d. per ounce; and between October 1, 1820, and May 1, 1821, the Bank might pay at any rate less than £3 19s. 6d., and not less than £3 178. 103d, on giving three days' notice in the Gazette. Such payments to be made in ingots or bars of gold, of the weight of sixty ounces. The Bank was also permitted to pay in gold coin on or after May 1, 1822.

"7. All the laws which restrained the exportation of gold and silver coin were repealed, and the coin was allowed to be exported or melted without incurring any penalty."

It will thus be seen that the law providing for resumption was based upon Ricardo's proposition for a Secure and Economical Currency; according to which, if called upon, the Bank might pay in bullion, the object being to protect it from demands for small sums. The Bank, however, did not avail itself of this privilege; while it anticipated the time fixed by Parliament, by resuming payment in coin on the first of May, 1821.

Simultaneously with the passage of the act providing for resumption, was that of another forbidding the Bank to make loans to government without permission of Parliament. The value of such provision, however, was wholly negatived by a clause allowing the Bank to continue the purchase of Exchequer bills.

The signal failure which followed the attempts at resumption, in 1817-18, taught the Bank a lesson which was well heeded in making its preparations for resumption in pursuance of the Act of 1819. No sooner was that Act passed than it immediately began to contract its issues, and continued to do so till the close of 1822. On the 31st of August, 1821, its note circulation equalled £20,295,000; its deposits, £5,818,000, and its specie, £11,233,000: against £25,252,000 of notes, £6,304,000 of deposits, and £3,595,000 of specie, on the 31st of August, 1819; and against £29,543,000 of notes, £9,084,000 of deposits, and £11,688,000 of specie, on the 31st of August, 1817. The reduction of liabilities from the time the Bank attempted to resume in 1817, to 1821, when it did resume, equalled £12,514,000. The circulation was still further reduced in 1822; averaging, for that year, £18,165,000. Its deposits for that year averaged £5,544,000; its total liabilities, only £23,704,000, a smaller sum than for any year since 1802. Its average liabilities for 1814 equalled £40,246,000; the reduction from that year to 1822 equalling £16,502,000. From 1822 to 1824, the Bank did not materially increase its note circulation; that for the former year averaging £18,811,000, and, for the latter, £19,934,000. Its deposits, growing out of the operations of government, however, increased from £5,544,000, in 1822, to £9,888,000, in 1824. It maintained a very large

average of specie until 1824; holding, on the 31st of August of that year, £11,787,000. In the latter part of 1824, however, a heavy demand set in, which continued uninterruptedly through 1825, reducing the amount in the Bank on the 28th of December of that year to £1,027,000, against £14,142,000 held by it on the 20th of December, 1823; the reduction in two years equalling £13,115,000. The year 1825 appeared to open most auspiciously. Even the King's speech dismissing the Parliament on the 6th of July of that year congratulated the country upon its "general and increasing prosperity." The more sagacious, however, by no means concurred in such an opinion. There was vast activity, based, as events proved, upon no substantial foundation. Never since the South Sea scheme had there been a spirit of speculation so excessive and universal as that which prevailed in the latter part of 1824 and throughout 1825. It was natural that the people, released from the apprehension with which resumption of specie payments was so long viewed, and from the restraints which such apprehension necessarily imposed, should lose control of themselves, and rush wildly into all sorts of visionary and extravagant schemes. This could not have been possible but for the country Banks, which issued their notes in a most profuse and reckless manner, fancying that they were possessed of the same impunity as during restriction. The conduct of the Bank, as far as its issues of notes were concerned, does not appear to have been at all censurable. The average amount of these in circulation in 1825 equalled only £20,076,000, against £22,000,000 in 1821, the year of the resumption, and against £18,065,000 in 1822. The increase was certainly no greater than might have been expected from that of the business of the country in the three years. The action of the Bank, however, did materially assist to increase the inflation, in connection with that of the government, which, in 1824, undertook to reduce £80,000,000 of four per cents to three and one-half per cents. The dissentients, of whom there were a large number, the Bank undertook to pay off. This threw a great amount of money into circulation. It also induced great numbers to sell their governments, for the purpose of realizing higher rates of interest. The public mind, therefore, was well prepared for the reception of any plausible scheme that promised great returns upon very small investments; and it was abundantly upplied. In less than two years, ending with 1825, six hun

dred and twenty-four speculative companies were formed and put upon the market, whose share capital equalled £372,173,000.1 At the same time, foreign loans were negotiated to the amount of £52,994,000, upon a considerable portion of which little or nothing was ever paid.2

1 These companies were classified as follows:

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The amount actually advanced on account of these companies equalled £17,605,625. It is needless to say, that nearly this whole sum was lost, and, with it, a vastly larger sum, in the extravagance and folly which always accompany an intense speculative movement.

2 The following is a list of foreign loans concluded in England at the period under discussion, the rate per cent, and the rate at which they were put upon the public:

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