upon his Character-Atrocious Conduct of Austria-Weakness of the Venetian Aristocracy-Insanity of the Democratic Party-Striking Contrast exhibited at the same period by the Nobility and People of England.

ALTHOUGH the war had now continued four years, and it was obvious to all the world that England and France were the principals in the contest, yet these two states had not as yet come into immediate and violent collision. Inferior powers required to be struck down, weaker states to be removed from the combat before the leaders of the fight dealt their blows at each other; like the champions of chivalry, who were separated in the commencement of the affray by subordinate knights, and did not engage in mortal conflict till the field was cleared of the dead and the dying.

CHAP.

XXII.

1797.

The period, however, was now approaching, when this could no longer continue, and the successes of France had been such as to compel Britain to fight, not merely for victory, but existence. All the allies with whom, and for whose protection she had engaged in the contest, were either struggling in the extremity of disaster, or openly arrayed under the banners of her enemies. Austria, after a desperate and heroic resistance in Italy, was preparing for the defence of her last barriers in the passes of the Alps. Holland was virtually incorporated with the conquering Republic. Spain had recently joined its forces; the whole Continent, from the Texel to Gibraltar, was arrayed against Great Britain, and all men were sensible that in spite of her maritime superiority, she had in the preceding winter narrowly escaped invasion in the most vulnerable quarter, and owed to the Gloomy aswinds and the waves her exemption from the horrors lic affairs in of civil war. The aspect of public affairs in Britain had never ning of

pect of pub

England in the begin

1797.

XXII.

1797.

CHAP. been so clouded since the commencement of the war, nor indeed during the whole of the 19th century, as they were at the opening of the year 1797. The return of Lord Malmesbury from Paris closed every hope of terminating a contest, in which the national burdens were daily increasing, while the prospect of success was continually diminishing. Party spirit raged with uncommon violence in every part of the empire. Insurrections prevailed in many districts of Ireland, discontents and suffering in all, commercial embarrassments were rapidly increasing, and the continued pressure on the bank threatened a total dissolution of public credit. The consequence of this accumulation of disasters was a rapid fall of the public securities; the three per cents were sold as low as 51, having fallen to that from 98, at which they stood at the commencement of the contest; petitions for a change of ministers and an alteration of government were presented from almost every city of note in the empire, and that general distrust Ann. Reg. and depression prevailed, which is at once the cause and the effect of public misfortune.'

1797, 148,

249.

Crisis of the
Bank.

The first of these disasters was one, which in a despotic state, unacquainted with the unlimited confidence in government, that, in a free state, results from long continued fidelity in the discharge of its engagements, would have proved fatal to the credit of government. For a long period the bank had experienced a pressure for money, owing partly to the demand for gold and silver, which resulted from the distresses of commerce, and partly to the great drains upon the specie of the country, which the extensive loans to the Imperial government had occasioned. So early as January, 1795, the influence of these causes were so severely felt, that the bank direc

XXII.

1797.

tors informed the Chancellor of the Exchequer that it CHAP. was their wish that he would so arrange his finances as not to depend on any farther assistance from them; and during the whole of that and the following year the peril of the continued advances for the Imperial loans was strongly and earnestly represented to government. The pressure arising from these causes, severely experienced through the whole of 1796, was brought to a crisis in the close of that year by the run upon the country banks, which arose from the dread of invasion, and the anxiety of every man to convert his paper into cash in the troubled times. which seemed to be approaching. These banks, as the only means of averting bankruptcy, applied from all quarters to the bank of England; the panic speedily gained the metropolis, and such was the run upon that establishment that they were reduced to payment in sixpences, and were on the verge of in- Important solvency, when an Order in Council was interposed Council susfor their relief, suspending all payments in cash, until payments. the sense of Parliament could be taken upon the best 2 Feb. means of restoring the circulation, and supporting the public and commercial credit of the country.'

Order in

pending cash

1

26th

1797.

Ann. Reg.

1797, 179180.

this subject

This great and momentous measure, fraught with such lasting and important consequences to the pro- Debates on sperity and fabric of society in Great Britain, was in Parlia immediately made the subject of anxious and vehe- ment. ment debate in both Houses of Parliament. On the one hand it was urged that this suspension of credit was not owing to any temporary disasters, but to deep, progressive, and accumulating causes; which all thinking men had long deplored, and which had grown to a head under the unhappy confidence which the House had reposed in the King's ministers; that the real cause of this calamity was to be found in the excessive and

XXII.

1797.

CHAP. extravagant expenditure in all departments of government, and the enormous loans to foreign states; that the consequences of this measure were certain; and might be seen as in a mirror in the adjoining Republic of France; a constant fall in the value of banknotes, a rise in the price of all the articles of human consumption, augmented expenditure, and a continuance of the frantic and costly expeditions, from which both the national honour and security had already so severely suffered. On the other hand, it was contended by the friends of administration, that it never was the intention of government to make bank-notes a legal tender; that the measure adopted was not a permanent regulation, but a temporary expedient to enable the bank to gain time to meet the heavy demands which unexpected circumstances had brought upon it; that the bank was perfectly able ultimately to make good all its engagements, and so the public had already become convinced, in the short interval which had elapsed since the Order in Council was issued; that it was indispensable, however, that Parliament should be satisfied of this solvency, and the necessity which existed for the measure which was adopted, and therefore that the matter should be referred to a secret committee, to report on the funds and engagements of the bank of 1 Parl. Hist. England, and the measures to be taken for its ultimate regulation.'

iii. 294,

394.

Bill, perpe

suspension,

porary.

This measure having been carried by Mr Pitt, a tuating this committee was appointed, which reported shortly at first tem- after that the funds of the Bank were L.17,597,000, while its debts were only L.13,770,000, leaving a balance of L.3,800,000 in favour of the establishment; but that it was necessary, for a limited time, to suspend the cash payments. Upon this, a bill, for

XXII.

1797.

At length

the restriction of payments in specie was introduced, CHAP. which provided, that bank-notes should be received as a legal tender by the collectors of taxes, and have the effect of stopping the issuing of arrest on mesne process for payment of debt between man and man. till the conThe bill was limited in its operation to the 24th clusion of June; but it was afterwards renewed from time to 1 Ann. Regtime; and in November, 1797, continued till the 1797, 192, conclusion of a general peace; and the obligation Par. Deon the bank to pay in specie was never again impo- xxxiii. 294, sed till Mr Peel's act in 1819.1

the war,

206.

bates,

394, and

1028.

Immense

consequen

change.

Such was the commencement of the paper system in Great Britain, which ultimately produced such astonishing effects; which enabled the empire to ces of this carry on, for so long a period, so costly a war, and to maintain for years armaments greater than had been raised by the Roman people in the zenith of their power; which brought the struggle at length to a triumphant issue, and arrayed all the forces of Eastern Europe, in English pay, against France, on the banks of the Rhine. To the same system must be ascribed ultimate effects as disastrous, as the immediate were beneficial and glorious: the continued and progressive rise of rents, and fall in the value of money; increased expenditure, the growth of sanguine ideas, and extravagant habits in all classes of society: unbounded speculation, prodigious profits, and frequent disasters among the commercial rich : increased wages, general prosperity, and occasional depression among the labouring poor: a vacillation of prices, unparalleled in any age of the world, a creation of property in some, and destruction of it in others, which equalled, in its ultimate consequences, all but the disasters of a revolution.

When government paper is made, either directly,