the country bank note circulation may totally ex~ plode at the period alluded to. Whenever such explosion occurs, it will take many weeks before the Bank of England can supply itself with a sufficient quantity of one pound notes to be issued under the protection of a Restriction Act, in order to supply the place of the country one pound notes. It will require two hundred of the Bank clerks for six weeks merely to sign the necessary quantity; and of course none but confidential clerks of the Bank can be employed for this purpose. How then is the labour of the country to be paid during this short but momentous period? Ought not the Bank of England to take the precaution of providing itself with ten or twelve millions of one pound notes to be issued instanter at such a crisis, in exchange for the larger notes, and to serve as a medium wherewith the country one pound notes may be either discharged or supported in circulation? Without some precaution of this nature, it is probable that the renewal of the Bank Restriction Act will be found unequal to its purposes, and for a short period the most frightful commotions may be apprehended throughout the country.

It is by no means impossible, under the calumnies to which the paper system has been long exposed, that these commotions may be of such a nature as will render it impossible for any force of law to preserve any kind of paper in circulation. It does seem, therefore, to be a wise and judicious precaution, either that the Bank of England should be provided

with an ample supply of one pound notes to meet the emergency contemplated, or otherwise that the renewal of the Bank Restriction Act should not be postponed, until the same circumstances which will render it necessary will perhaps render it useless at the same time.

No. IX.

ANTICIPATION OF THE NEW BANK RESTRICTION ACT.

On the Danger of postponing the passing of a New Bank Re

striction Act.

February 2, 1828.

SINCE the month of May, 1823, the Bank of England note has ceased by law to be a legal tender, and all debts of all kinds have been payable by law in coins of the realm. This great truth, however, continued unnoticed by the public for a long period; and when it became necessary largely to increase the issues of bank notes in December, 1825, during the period of what is called "the panic," it was found that the bank note still retained its influence over the public mind; and by virtue of that influence, and of that influence only, the country was rescued from the state of frightful anarchy which threatened it. The Bank of England circulation was increased between December 10 and December 24, 1825, from eighteen millions to twenty-six millions. The bank note had still the character and moral power of a legal tender over the public mind. No one thought he had the right of refusing to receive it; and no one thought he had the right of demanding gold in

payment for it. Had it not been for this state of the public mind, the panic could not have been relieved by the increased issues of bank notes, because such increased issues would have been thrown in upon the Bank for payment as fast as they were issued, and instead of relieving the panic they would but have added fuel to the flame, until the whole structure of our public credit was destroyed.

Under the emergency here alluded to, it is very doubtful how far a new Bank Restriction Act could have been passed in due time, and have been made competent to protect the most vital interests of the nation. If the bank note had, at the period in question, lost its moral influence over the public mind, it is probable that no force of law could suddenly have restored it. It would not have been enough for an order in council to have protected or restricted the Bank of England, a positive Act of Parliament would have been necessary. The London bankers generally, and the country bankers generally, must also have had a similar protection, or in default of this, universal ruin would have rushed in at one door when shut out at the other. During the panic, these latter bodies of men were enabled to meet the sudden and general demands upon them by giving Bank of England notes in payment of those demands. But if the Bank of England notes had then lost their moral power, or if it had been known generally that they were no longer legal tenders, the public would generally have refused to receive them in payment of their demands,

unless the same power which protected the Bank of England from paying gold, protected also the London and the country bankers from giving any thing but Bank of England notes in payment of the demands upon them.

From these considerations it appears certainly probable, that in case any future panic should occur, at a period when the bank note shall have lost its moral influence over the public mind, or in other words, when the late Bank Restriction Act shall have been repealed de facto, in its power and influence over the public welfare, as well as de jure in the mere technical letter of the law, it does seem probable, in case of a new panic occurring at such a period, that the increased issues of Bank of England notes, or even an order in council to protect the Bank of England, would not be sufficient to meet and overcome the national emergency. A positive Act of Parliament would be required, and if such Act of Parliament could not be passed in forty-eight hours or thereabouts, the most dreadful consequences might be apprehended to ensue. In the passing of such an Act of Parliament, indeed, hours would be more precious than months, in any other parts of the legislation of the country.

The recurrence of a new panic is not, it is true, absolutely certain, but it is nearly so*. It may, in

* A new panic may originate in many ways. The slightest turn of the exchanges, or the slightest rumour of a reduced standard, might bring it on in forty-eight hours! The London bankers and merchants are now so glutted with bank notes, that it is