11. The Suspension of Cash Payments [Reports of Committees on Bank of England, 1797 and 1826, in Reports 1826 (III), pp. 142 and 255-256], 1797.
The alarm of Invasion [in 1796-1797] which, when an immediate attack was first apprehended in Ireland, had occasioned some extraordinary demand for cash on the Bank of England, in the months of December and January last, began in February to produce similar results in the north of England. Your Committee find, that in consequence of this apprehension, the farmers suddenly brought the produce of their lands to sale, and carried the notes of the County Banks, which they had collected by those and other means, into those banks for payment; that this unusual and sudden demand for cash reduced the several banks at Newcastle to the necessity of suspending their payments in specie, and of availing themselves of all the means in their power of procuring a speedy supply of cash from the metropolis; that the effects of this demand on the Newcastle banks and their suspension of payments in cash, soon spread over various parts of the country, from whence similar applications were consequently made to the metropolis for cash; that the alarm thus diffused not only occasioned an increased demand for cash in the country, but probably a disposition in many to hoard what was thus obtained; that this call on the metropolis, through whatever channels, directly affected the Bank of England, as the great repository of cash, and was in the course of still further operation upon it, when stopped by the Minute of Council of the 26th of February.[389]
Your Committee find, that the Court of Directors of the Bank did, on the 26th October 1797, come to a Resolution, a copy of which is subjoined to this Report.
Your Committee, having further examined the Governor and Deputy Governor, as to what may be meant by the political circumstances mentioned in that resolution, find, that they understand by them, the state of hostility in which the nation is still involved, and particularly such apprehensions as may be entertained of invasion, either in Ireland or in this country, together with the possibility there may be of advances being to be made from this country to Ireland; and that from these circumstances so explained, and from the nature of the war, and the avowed purpose of the enemy to attack this country by means of its public credit, and to distress it in its financial operations, they are led to think that it will be expedient to continue the restriction now subsisting, with the reserve for partial issues of cash, at the discretion of the Bank, of the nature of that contained in the present Acts; and that it may be so continued, without injury to the credit of the Bank, and to the advantage of the nation.
"Resolved, that it is the opinion of this Court,[390] that the Governor and Company of the Bank of England are enabled to issue Specie, in any manner that may be deemed necessary for the accommodation of the public; and the Court have no hesitation to declare that the affairs of the Bank are in such a state, that it can with safety resume its accustomed functions, if the political circumstances of the country do not render it inexpedient: but the Directors deeming it foreign to their province to judge of these points, wish to submit to the wisdom of Parliament, whether, as it has been once judged proper to lay a restriction on the payment of the bank in cash, it may, or may not, be prudent to continue the same?"[391]
[389] The Minute of February 26, 1797, suspended the obligation of the Bank of England to pay coin for its notes.
[390] Copy of a Resolution of the Court of Directors of the Bank of England at a meeting on Thursday, October 26, 1797.
[391] The Bank of England resumed cash payments, 1819.
12. Pitt's Speech on the Income Tax [Speeches of William Pitt, edited W.S. Hathaway, 1806, Vol. III, pp. 282-333], 1798.